| (Mark One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
| [ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| for the quarterly period ended June 30, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| Or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| [ ]Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| for the transition period from                                                       to                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |   |
| Commission File Number 000-50266                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |   |
| New Mexico                                                     |   | 85-0242376                           |
|----------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction of incorporation of organization) |   | (I.R.S. Employer Identification No.) |
|                                                           |   |                                 |
| 1200 Trinity Drive, Los Alamos, New Mexico 87544               |
| (Address of principal executive offices)                       |
|                                                           |   |                                 |
| (505) 662-5171                                            |
| (Registrant's telephone number, including Area Code)           |

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| Large Accelerated Filer  [ ] | Accelerated Filer  [ X ]   |
|----------------------------------------|--------------------------------------|
| Non-Accelerated Filer  [ ]   | Smaller Reporting Company   [ ] |

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| PART I. FINANCIAL INFORMATION |
|-------------------------------|
|                          |   |
| Item 1.                       | Financial Statements (unaudited) |
|                          |   |
| Item 2.                       | Management's Discussion and Analysis of Financial Condition and Results of Operations |
|                          |   |
| Item 3.                       | Quantitative and Qualitative Disclosures About Market Risk |
|                          |   |
| Item 4.                       | Controls and Procedures |
|                          |   |
| PART II. OTHER INFORMATION    |
|                          |   |
| Item 1.                       | Legal Proceedings |
|                          |   |
| Item 1A.                      | Risk Factors |
|                          |   |
| Item 2.                       | Unregistered Sales of Equity Securities and Use of Proceeds |
|                          |   |
| Item 3.                       | Defaults Upon Senior Securities |
|                          |   |
| Item 4.                       | Mine Safety Disclosures |
|                          |   |
| Item 5.                       | Other Information |
|                          |   |
| Item 6.                       | Exhibits |
|                          |   |
|                          | SIGNATURES |
|                          |   |
|                          | CERTIFICATIONS |

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|                                                                                                                                      |   | June 30,2012 |      |   | December 31, 2011 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|--------|-------------------|--------|
| ASSETS                                                                                                                                    |   |              |      |   |                   |   |
| Cash and due from banks                                                                                                                   |   | $            | 18,482    |   |              | $      | 22,690 |   |
| Interest-bearing deposits with banks                                                                                                      |   |         | 86,686    |   |              |   | 48,610 |   |
| Federal funds sold and securities purchased under resell agreements                                                                       |   |         | 3,249     |   |              |   | 11,583 |   |
| Cash and cash equivalents                                                                                                                 |   |         | 108,417   |   |              |   | 82,883 |   |
| Investment securities available for sale                                                                                                  |   |         | 143,378   |   |              |   | 134,711 |   |
| Investment securities held to maturity, at amortized cost (fair value of $12,268 at June 30, 2012 and $11,879 at  December 31, 2011) |   |         | 10,611    |   |              |   | 10,779 |   |
| Investment in unconsolidated trusts                                                                                                       |   |         | 1,116     |   |              |   | 1,116 |   |
| Non-marketable equity securities                                                                                                          |   |         | 7,300     |   |              |   | 7,997 |   |
| Loans held for sale                                                                                                                       |   |         | 8,895     |   |              |   | 22,549 |   |
| Loans (net of allowance for loan losses of $25,071 at June 30, 2012 and $27,909 at December 31, 2011)                                     |   |         | 1,174,173 |   |              |   | 1,187,948 |   |
| Premises and equipment, net                                                                                                               |   |         | 26,352    |   |              |   | 27,082 |   |
| Leased property under capital leases, net                                                                                                 |   |         | 2,211     |   |              |   | 2,211 |   |
| Accrued interest receivable                                                                                                               |   |         | 5,221     |   |              |   | 5,889 |   |
| Mortgage servicing rights, net                                                                                                            |   |         | 6,639     |   |              |   | 6,250 |   |
| Other real estate owned                                                                                                                   |   |         | 30,199    |   |              |   | 14,139 |   |
| Prepaid expenses                                                                                                                          |   |         | 3,246     |   |              |   | 3,426 |   |
| Net deferred tax assets                                                                                                                   |   |         | 6,785     |   |              |   | 8,102 |   |
| Other assets                                                                                                                              |   |         | 9,916     |   |              |   | 8,387 |   |
| Total assets                                                                                                                              |   | $            | 1,544,459 |   |              | $      | 1,523,469 |   |

----

|                                                                                                                                                                  |   | June 30,2012 |      |   | December 31, 2011 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|--------|-------------------|--------|
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                  |   |              |      |   |                   |   |
| Liabilities                                                                                                                                                           |   |              |      |   |                   |   |
| Deposits:                                                                                                                                                             |   |              |      |   |                   |   |
| Noninterest-bearing                                                                                                                                                   |   | $            | 154,696   |   |              | $      | 152,669 |   |
| Interest-bearing                                                                                                                                                      |   |         | 1,195,811 |   |              |   | 1,174,458 |   |
| Total deposits                                                                                                                                                        |   |         | 1,350,507 |   |              |   | 1,327,127 |   |
| Long-term borrowings                                                                                                                                                  |   |         | 22,300    |   |              |   | 22,300 |   |
| Long-term capital lease obligations                                                                                                                                   |   |         | 2,211     |   |              |   | 2,211 |   |
| Junior subordinated debt owed to unconsolidated trusts                                                                                                                |   |         | 37,116    |   |              |   | 37,116 |   |
| Accrued interest payable                                                                                                                                              |   |         | 1,914     |   |              |   | 2,141 |   |
| Other liabilities                                                                                                                                                     |   |         | 5,874     |   |              |   | 6,360 |   |
| Total liabilities                                                                                                                                                     |   |         | 1,419,922 |   |              |   | 1,397,255 |   |
|                                                                                                                                                                  |   |         |      |   |              |   |   |   |
| Stock owned by Employee Stock Ownership Plan (ESOP); 658,257 shares and 628,914 shares at June 30, 2012 and December 31, 2011, respectively, at fair value            |   | $            | 8,162     |   |              | $      | 8,245 |   |
| Commitments and contingencies (Note 12)                                                                                                                               |   |         |      |   |              |   |   |   |
| Stockholders' equity                                                                                                                                                  |   |         |      |   |              |   |   |   |
| Preferred stock, no par, authorized 1,000,000 shares                                                                                                                  |   |         |      |   |              |   |   |   |
| Series A, 5% cumulative perpetual, 35,539 shares issued and outstanding at June 30, 2012 and December 31, 2011, $1,000 liquidation value per share, at amortized cost |   | $            | 34,123    |   |              | $      | 34,018 |   |
| Series B, 9% cumulative perpetual, 1,777 shares issued and outstanding at June 30, 2012 and December 31, 2011, $1,000 liquidation value per share, at amortized cost  |   |         | 1,996     |   |              |   | 2,012 |   |
| Common stock, no par, authorized 20,000,000 shares; issued 6,856,800 shares, shares outstanding 6,449,726 at June 30, 2012 and December 31, 2011                      |   |         | 6,836     |   |              |   | 6,836 |   |
| Additional paid-in capital                                                                                                                                            |   |         | 1,997     |   |              |   | 1,976 |   |
| Retained earnings                                                                                                                                                     |   |         | 82,534    |   |              |   | 84,240 |   |
| Accumulated other comprehensive (loss)                                                                                                                                |   |         | (137      | )      |              |   | (139 | ) |
| Total stockholders' equity before treasury stock                                                                                                                      |   |         | 127,349   |   |              |   | 128,943 |   |
| Treasury stock, at cost, 407,074 shares at June 30, 2012 and December 31, 2011                                                                                        |   |         | (10,974   | )      |              |   | (10,974 | ) |
| Total stockholders' equity                                                                                                                                            |   |         | 116,375   |   |              |   | 117,969 |   |
| Total liabilities and stockholders' equity                                                                                                                            |   | $            | 1,544,459 |   |              | $      | 1,523,469 |   |

----

|                                                   |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|--------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                                   |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
| Interest income:                                       |   |                            |   |   |                          |    |   |  |   |   |  |   |
| Loans, including fees                                  |   | $                     | 15,982 |   |                     | $  | 15,927 |   |   | $  | 32,158 |   |   | $  | 31,663 |   |
| Investment securities:                                 |   |                       |   |   |                     |    |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                |   |                       | 451    |   |                     |    | 704 |   |   |   | 966 |   |   |   | 1,423 |   |
| Nontaxable                                             |   |                       | 162    |   |                     |    | 283 |   |   |   | 326 |   |   |   | 564 |   |
| Federal funds sold                                     |   |                       | 24     |   |                     |    | 7 |   |   |   | 57 |   |   |   | 7 |   |
| Other interest-bearing deposits                        |   |                       | 52     |   |                     |    | 80 |   |   |   | 92 |   |   |   | 134 |   |
| Investment in unconsolidated trusts                    |   |                       | 17     |   |                     |    | 18 |   |   |   | 34 |   |   |   | 40 |   |
| Other interest income                                  |   |                       | 34     |   |                     |    | 35 |   |   |   | 69 |   |   |   | 70 |   |
| Total interest income                                  |   |                       | 16,722 |   |                     |    | 17,054 |   |   |   | 33,702 |   |   |   | 33,901 |   |
| Interest expense:                                      |   |                       |   |   |                     |    |   |   |   |   |   |   |   |   |   |   |
| Deposits                                               |   |                       | 1,795  |   |                     |    | 2,200 |   |   |   | 3,666 |   |   |   | 4,553 |   |
| Short-term borrowings                                  |   |                       | -      |   |                     |    | 64 |   |   |   | - |   |   |   | 104 |   |
| Long-term borrowings                                   |   |                       | 189    |   |                     |    | 189 |   |   |   | 378 |   |   |   | 403 |   |
| Long-term capital lease obligations                    |   |                       | 67     |   |                     |    | 67 |   |   |   | 134 |   |   |   | 134 |   |
| Junior subordinated debt owed to unconsolidated trusts |   |                       | 563    |   |                     |    | 685 |   |   |   | 1,134 |   |   |   | 1,408 |   |
| Total interest expense                                 |   |                       | 2,614  |   |                     |    | 3,205 |   |   |   | 5,312 |   |   |   | 6,602 |   |
| Net interest income                                    |   |                       | 14,108 |   |                     |    | 13,849 |   |   |   | 28,390 |   |   |   | 27,299 |   |
| Provision for loan losses                              |   |                       | 9,755  |   |                     |    | 2,129 |   |   |   | 11,874 |   |   |   | 3,579 |   |
| Net interest income after provision for loan losses    |   |                       | 4,353  |   |                     |    | 11,720 |   |   |   | 16,516 |   |   |   | 23,720 |   |
| Other income:                                          |   |                       |   |   |                     |    |   |   |   |   |   |   |   |   |   |   |
| Mortgage loan servicing fees                           |   |                       | 645    |   |                     |    | 665 |   |   |   | 1,291 |   |   |   | 1,332 |   |
| Trust and investment services fees                     |   |                       | 523    |   |                     |    | 501 |   |   |   | 1,020 |   |   |   | 961 |   |
| Loan and other fees                                    |   |                       | 923    |   |                     |    | 898 |   |   |   | 1,755 |   |   |   | 1,711 |   |
| Service charges on deposits                            |   |                       | 407    |   |                     |    | 429 |   |   |   | 788 |   |   |   | 812 |   |
| Net gain on sale of loans                              |   |                       | 1,936  |   |                     |    | 459 |   |   |   | 3,622 |   |   |   | 1,739 |   |
| Net gain on sale of securities                         |   |                       | -      |   |                     |    | 25 |   |   |   | - |   |   |   | 196 |   |
| Title insurance premiums                               |   |                       | 285    |   |                     |    | 141 |   |   |   | 541 |   |   |   | 305 |   |
| (Loss) on venture capital investments                  |   |                       | (4     | )      |                     |    | - |   |   |   | (233 | ) |   |   | (225 | ) |
| Other operating income                                 |   |                       | 211    |   |                     |    | 105 |   |   |   | 358 |   |   |   | 209 |   |
| Total other income                                     |   |                       | 4,926  |   |                     |    | 3,223 |   |   |   | 9,142 |   |   |   | 7,040 |   |

----

|                                                            |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|-----------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                                            |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
| Other expenses:                                                 |   |                            |   |   |                          |    |   |  |   |   |  |   |
| Salaries and employee benefits                                  |   | $                     | 5,787  |   |                     | $  | 5,457 |   |   | $  | 11,994 |   |   | $  | 10,958 |   |
| Occupancy                                                       |   |                       | 1,020  |   |                     |    | 951 |   |   |   | 1,984 |   |   |   | 1,885 |   |
| Data processing                                                 |   |                       | 819    |   |                     |    | 932 |   |   |   | 1,749 |   |   |   | 1,720 |   |
| Marketing                                                       |   |                       | 409    |   |                     |    | 313 |   |   |   | 807 |   |   |   | 768 |   |
| Amortization and valuation of mortgage servicing rights         |   |                       | 1,195  |   |                     |    | 501 |   |   |   | 1,028 |   |   |   | 804 |   |
| Amortization and valuation of other intangible assets           |   |                       | -      |   |                     |    | 163 |   |   |   | - |   |   |   | 326 |   |
| Supplies                                                        |   |                       | 175    |   |                     |    | 145 |   |   |   | 374 |   |   |   | 506 |   |
| Loss on sale and valuation allowance on other real estate owned |   |                       | 668    |   |                     |    | 1,673 |   |   |   | 1,628 |   |   |   | 2,331 |   |
| Postage                                                         |   |                       | 170    |   |                     |    | 180 |   |   |   | 395 |   |   |   | 357 |   |
| Bankcard and ATM network fees                                   |   |                       | 401    |   |                     |    | 374 |   |   |   | 755 |   |   |   | 717 |   |
| Legal, professional and accounting fees                         |   |                       | 892    |   |                     |    | 925 |   |   |   | 1,755 |   |   |   | 1,650 |   |
| FDIC insurance premiums                                         |   |                       | 503    |   |                     |    | 748 |   |   |   | 1,003 |   |   |   | 1,509 |   |
| Collection expenses                                             |   |                       | 358    |   |                     |    | 547 |   |   |   | 1,096 |   |   |   | 981 |   |
| Repossession and fraud losses                                   |   |                       | 30     |   |                     |    | 165 |   |   |   | 62 |   |   |   | 217 |   |
| Other                                                           |   |                       | 737    |   |                     |    | 653 |   |   |   | 836 |   |   |   | 1,691 |   |
| Total other expense                                             |   |                       | 13,164 |   |                     |    | 13,727 |   |   |   | 25,466 |   |   |   | 26,420 |   |
| Income (loss) before provision for income taxes                 |   |                       | (3,885 | )      |                     |    | 1,216 |   |   |   | 192 |   |   |   | 4,340 |   |
| Provision (benefit) for income taxes                            |   |                       | (1,607 | )      |                     |    | 447 |   |   |   | (45 | )  |   |   | 1,485 |   |
| Net income (loss)                                               |   | $                     | (2,278 | )      |                     | $  | 769 |   |   | $  | 237 |   |   | $  | 2,855 |   |
| Dividends and discount accretion on preferred shares            |   |                       | 528    |   |                     |    | 542 |   |   |   | 1,057 |   |   |   | 1,084 |   |
| Net income (loss) available to common shareholders              |   | $                     | (2,806 | )      |                     | $  | 227 |   |   | $  | (820 | ) |   | $  | 1,771 |   |
| Basic earnings (loss) per common share                          |   | $                     | (0.44  | )      |                     | $  | 0.03 |   |   | $  | (0.13 | ) |   | $  | 0.27 |   |
| Diluted earnings (loss) per common share                        |   | $                     | (0.44  | )      |                     | $  | 0.03 |   |   | $  | (0.13 | ) |   | $  | 0.27 |   |

----

|                                                    |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|---------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                                    |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                                    |   |                            |   |
| Net income (loss)                                       |   | $                     | (2,278 | )      |                     | $  | 769 |   |   | $  | 237 |   |   | $  | 2,855 |   |
| Securities available for sale:                          |   |                       |   |   |                     |    |   |   |   |   |   |   |   |   |   |   |
| Net unrealized gains arising during the period          |   |                       | 183    |   |                     |    | 422 |   |   |   | 4 |   |   |   | 544 |   |
| Related income tax expense                              |   |                       | (73    | )      |                     |    | (152 | ) |   |   | (2 | ) |   |   | (191 | ) |
| Net securities gains reclassified into earnings         |   |                       | -      |   |                     |    | (25 | ) |   |   | - |   |   |   | (196 | ) |
| Related income tax benefit                              |   |                       | -      |   |                     |    | 9 |   |   |   | - |   |   |   | 65 |   |
| Net effect on other comprehensive income for the period |   |                       | 110    |   |                     |    | 254 |   |   |   | 2 |   |   |   | 222 |   |
| Total comprehensive income (loss)                       |   | $                     | (2,168 | )      |                     | $  | 1,023 |   |   | $  | 239 |   |   | $  | 3,077 |   |

----

|                                                                              |   | Six Months EndedJune 30, |     |
|-----------------------------------------------------------------------------------|--------|--------------------------|----------|
|                                                                              |   | 2012                     |     |   | 2011 |   |
| Cash Flows From Operating Activities                                              |   |                     |          |   |
| Net income                                                                        |   | $                   | 237      |   |   | $  | 2,855 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |
| Depreciation and amortization                                                     |   |                     | 1,484    |   |   |   | 1,526 |   |
| Net amortization of:                                                              |   |                     |     |   |   |   |   |   |
| Mortgage servicing rights                                                         |   |                     | 794      |   |   |   | 756 |   |
| Other intangible assets                                                           |   |                     | -        |   |   |   | 326 |   |
| Prepaid expenses                                                                  |   |                     | 1,263    |   |   |   | 2,909 |   |
| Purchased income tax credits                                                      |   |                     | 203      |   |   |   | 127 |   |
| Premium and discounts on investment securities, net                               |   |                     | 792      |   |   |   | 928 |   |
| Junior subordinated debt owed to unconsolidated trusts issuance costs             |   |                     | 7        |   |   |   | 7 |   |
| Provision for loan losses                                                         |   |                     | 11,874   |   |   |   | 3,579 |   |
| Change in mortgage servicing rights valuation allowance                           |   |                     | 234      |   |   |   | 48 |   |
| Loss on disposal of premises and equipment                                        |   |                     | 4        |   |   |   | - |   |
| Net gain on sale of investment securities                                         |   |                     | -        |   |   |   | (196 | ) |
| Federal Home Loan Bank (FHLB) stock dividends received                            |   |                     | (4       | ) |   |   | (5 | ) |
| Loss on venture capital investments                                               |   |                     | 233      |   |   |   | 225 |   |
| Net gain on sale of loans                                                         |   |                     | (3,622   | ) |   |   | (1,739 | ) |
| Loss on disposal of other real estate owned                                       |   |                     | 165      |   |   |   | 847 |   |
| Valuation allowance on other real estate owned                                    |   |                     | 1,442    |   |   |   | 1,546 |   |
| Decrease (increase) in deferred income tax assets                            |   |                     | 1,316    |   |   |   | (118 | ) |
| (Increase) decrease in other assets                                          |   |                     | (2,359   | ) |   |   | 1,830 |   |
| (Decrease) in other liabilities                                                   |   |                     | (715     | ) |   |   | (1,967 | ) |
| Stock options and stock appreciation rights expenses                              |   |                     | 20       |   |   |   | 38 |   |
| Gross sales of loans held for sale                                                |   |                     | 146,424  |   |   |   | 71,343 |   |
| Origination of loans held for sale                                                |   |                     | (130,565 | ) |   |   | (48,707 | ) |
| Net cash provided by operating activities                                         |   |                     | 29,227   |   |   |   | 36,158 |   |

----

|                                                                               |   | Six Months EndedJune 30, |    |
|------------------------------------------------------------------------------------|--------|--------------------------|---------|
|                                                                               |   | 2012                     |    |   | 2011 |   |
| Cash Flows From Investing Activities                                               |   |                     |         |   |
| Proceeds from maturities and paydowns of investment securities, available for sale |   | $                   | 40,883  |   |   | $  | 41,080 |   |
| Proceeds from maturities and paydowns of investment securities, held to maturity   |   |                     | 169     |   |   |   | 162 |   |
| Proceeds from maturities and paydowns of investment securities, other              |   |                     | 662     |   |   |   | 470 |   |
| Proceeds from sale of investment securities, available for sale                    |   |                     | -       |   |   |   | 7,090 |   |
| Purchase of investment securities, available for sale                              |   |                     | (50,340 | ) |   |   | (29,232 | ) |
| Purchase of investment securities, held to maturity                                |   |                     | -       |   |   |   | - |   |
| Purchase of investment securities, other                                           |   |                     | (347    | ) |   |   | (180 | ) |
| Proceeds from sale of other real estate owned                                      |   |                     | 576     |   |   |   | 3,493 |   |
| Loans funded, net of repayments                                                    |   |                     | (14,423 | ) |   |   | (7,449 | ) |
| Purchases of loans                                                                 |   |                     | (2,041  | ) |   |   | (1,200 | ) |
| Purchases of premises and equipment                                                |   |                     | (278    | ) |   |   | (715 | ) |
| Net cash (used in) provided by investing activities                                |   |                     | (25,139 | ) |   |   | 13,519 |   |
| Cash Flows From Financing Activities                                               |   |                     |    |   |   |
| Net increase in demand deposits, NOW accounts and savings accounts                 |   |                     | 27,909  |   |   |   | 47,732 |   |
| Net decrease in time deposits                                                      |   |                     | (4,529  | ) |   |   | (58,321 | ) |
| Repayment of borrowings                                                            |   |                     | -       |   |   |   | (1,152 | ) |
| Common shares dividend payments                                                    |   |                     | (966    | ) |   |   | - |   |
| Preferred shares dividend payments                                                 |   |                     | (968    | ) |   |   | (1,976 | ) |
| Net cash provided by (used in)  financing activities                          |   |                     | 21,446  |   |   |   | (13,717 | ) |
| Net increase in cash and cash equivalents                                          |   |                     | 25,534  |   |   |   | 35,960 |   |
| Cash and cash equivalents:                                                         |   |                     |    |   |   |   |   |   |
| Beginning of period                                                                |   |                     | 82,883  |   |   |   | 106,191 |   |
| End of period                                                                      |   | $                   | 108,417 |   |   | $  | 142,151 |   |
| Supplemental Disclosures of Cash Flow Information                                  |   |
| Cash payments for:                                                                 |   |                     |    |   |   |   |   |   |
| Interest                                                                           |   | $                   | 5,539   |   |   | $  | 9,002 |   |
| Income taxes                                                                       |   |                     | 1,808   |   |   |   | 355 |   |
| Non-cash investing and financing activities:                                       |   |
| Transfers from loans to other real estate owned                                    |   |                     | 23,342  |   |   |   | 3,402 |   |
| Transfers from loans to repossessed assets                                         |   |                     | 122     |   |   |   | - |   |
| Sales of other real estate owned financed by loans                                 |   |                     | 5,099   |   |   |   | 5,400 |   |
| Dividends declared, not yet paid                                                   |   |                     | 1,212   |   |   |   | 242 |   |
| Change in unrealized gain on investment securities, net of taxes                   |   |                     | 2       |   |   |   | 222 |   |

----

----

| `                                                                                 |   | Three Months EndedJune 30,                      |      |   | Six Months EndedJune 30, |    |
|-----------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|--------|--------------------------|---------|
|                                                                              |   | 2012                                            |      |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                                                              |   | (In thousands, except share and per share data) |      |
| Net income (loss)                                                                 |   | $                                          | (2,278    | )      |                     | $  | 769 |   |   | $  | 237 |   |   | $  | 2,855 |   |
| Dividends and discount accretion on preferred shares                              |   |                                            | 528       |   |                     |    | 542 |   |   |   | 1,057 |   |   |   | 1,084 |   |
| Net income (loss) available to common shareholders                                |   | $                                          | (2,806    | )      |                     | $  | 227 |   |   | $  | (820 | ) |   | $  | 1,771 |   |
| Weighted average common shares issued                                             |   |                                            | 6,856,800 |   |                     |    | 6,856,800 |   |   |   | 6,856,800 |   |   |   | 6,856,800 |   |
| LESS: Weighted average treasury stock shares                                      |   |                                            | (407,074  | )      |                     |    | (411,258 | ) |   |   | (407,074 | ) |   |   | (411,258 | ) |
| LESS: Weighted average unearned Employee Stock Ownership Plan (ESOP) stock shares |   |                                            | -         |   |                     |    | - |   |   |   | - |   |   |   | - |   |
| Weighted average common shares outstanding, net                                   |   |                                            | 6,449,726 |   |                     |    | 6,445,542 |   |   |   | 6,449,726 |   |   |   | 6,445,542 |   |
| Basic earnings (loss) per common share                                            |   | $                                          | (0.44     | )      |                     | $  | 0.03 |   |   | $  | (0.13 | ) |   | $  | 0.27 |   |
| Dilutive effect of stock-based compensation                                       |   |                                            | -         |   |                     |    | - |   |   |   | - |   |   |   | - |   |
| Weighted average common shares outstanding including dilutive shares              |   |                                            | 6,449,726 |   |                     |    | 6,445,542 |   |   |   | 6,449,726 |   |   |   | 6,445,542 |   |
| Diluted earnings (loss) per common share                                          |   | $                                          | (0.44     | )      |                     | $  | 0.03 |   |   | $  | (0.13 | ) |   | $  | 0.27 |   |

----

| AVAILABLE FOR SALE                     |   | AmortizedCost  |    |   | GrossUnrealizedGains |    |   | GrossUnrealizedLosses |   |    | FairValue |   |
|----------------------------------------|--------|----------------|---------|--------|----------------------|---------|--------|-----------------------|--------|---------|-----------|--------|
|                                   |   | (In thousands) |    |
| June 30, 2012                          |   |                |    |   |                      |    |   |                       |   |    |           |   |
| U.S. Government sponsored agencies     |   | $         | 79,430  |   |                 | $  | 195    |                  |   | $  | (8        | )      |   | $  | 79,617 |   |
| States and political subdivisions      |   |           | 5,598   |   |                 |    | 47     |                  |   |    | -         |   |   |   | 5,645 |   |
| Residential mortgage-backed securities |   |           | 58,577  |   |                 |    | 355    |                  |   |    | (816      | )      |   |   | 58,116 |   |
| Totals                                 |   | $         | 143,605 |   |                 | $  | 597    |                  |   | $  | (824      | )      |   | $  | 143,378 |   |
|                                   |   |           |    |   |                 |    |   |                  |   |    |      |   |   |   |   |   |
| December 31, 2011                      |   |           |    |   |                 |    |   |                  |   |    |      |   |   |   |   |   |
| U.S. Government sponsored agencies     |   | $         | 60,350  |   |                 | $  | 253    |                  |   | $  | (28       | )      |   | $  | 60,575 |   |
| States and political subdivisions      |   |           | 5,960   |   |                 |    | 70     |                  |   |    | -         |   |   |   | 6,030 |   |
| Residential mortgage-backed securities |   |           | 68,632  |   |                 |    | 326    |                  |   |    | (852      | )      |   |   | 68,106 |   |
| Totals                                 |   | $         | 134,942 |   |                 | $  | 649    |                  |   | $  | (880      | )      |   | $  | 134,711 |   |

----

| HELD TO MATURITY                  |   | AmortizedCost  |   |   | GrossUnrealizedGains |    |   | GrossUnrealizedLosses |   |    | FairValue |   |
|-----------------------------------|--------|----------------|--------|--------|----------------------|---------|--------|-----------------------|--------|---------|-----------|--------|
|                              |   | (In thousands) |   |
| June 30, 2012                     |   |                |   |   |                      |    |   |                       |   |    |           |   |
| States and political subdivisions |   | $         | 10,611 |   |                 | $  | 1,789  |                  |   | $  | (132      | )      |   | $  | 12,268 |   |
| Totals                            |   | $         | 10,611 |   |                 | $  | 1,789  |                  |   | $  | (132      | )      |   | $  | 12,268 |   |
|                              |   |           |   |   |                 |    |   |                  |   |    |      |   |   |   |   |   |
| December 31, 2011                 |   |           |   |   |                 |    |   |                  |   |    |      |   |   |   |   |   |
| States and political subdivisions |   | $         | 10,779 |   |                 | $  | 1,263  |                  |   | $  | (163      | )      |   | $  | 11,879 |   |
| Totals                            |   | $         | 10,779 |   |                 | $  | 1,263  |                  |   | $  | (163      | )      |   | $  | 11,879 |   |
|                  |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|-----------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                  |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                  |   | (In thousands)             |   |
| Gross realized gains  |   | $                     | -      |   |                     | $  | 28 |   |   | $  | - |   |   | $  | 202 |   |
| Gross realized losses |   |                       | -      |   |                     |    | (3 | ) |   |   | - |   |   |   | (6 | ) |
| Net gains             |   | $                     | -      |   |                     | $  | 25 |   |   | $  | - |   |   | $  | 196 |   |
|                                   |   | Less than 12 Months |   |   | 12 Months or Longer |    |   | Total     |   |
|----------------------------------------|--------|---------------------|--------|--------|---------------------|---------|--------|-----------|--------|
| AVAILABLE FOR SALE                     |   | FairValue           |   |   | UnrealizedLosses    |    |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                                   |   | (In thousands)      |   |
| June 30, 2012                          |   |                     |   |   |                     |    |   |           |   |   |  |   |   |  |   |   |  |   |
| U.S. Government sponsored agencies     |   | $              | 19,492 |   |                | $  | (8     | )         |   | $  | - |   |   | $  | - |   |   | $  | 19,492 |   |   | $  | (8 | ) |
| Residential mortgage-backed securities |   |                | 23,432 |   |                |    | (383   | )         |   |   | 8,945 |   |   |   | (433 | ) |   |   | 32,377 |   |   |   | (816 | ) |
| Totals                                 |   | $              | 42,924 |   |                | $  | (391   | )         |   | $  | 8,945 |   |   | $  | (433 | ) |   | $  | 51,869 |   |   | $  | (824 | ) |
|                                   |   |                |   |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011                      |   |                |   |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Government sponsored agencies     |   | $              | 24,316 |   |                | $  | (28    | )         |   | $  | - |   |   | $  | - |   |   | $  | 24,316 |   |   | $  | (28 | ) |
| Residential mortgage-backed securities |   |                | 25,800 |   |                |    | (672   | )         |   |   | 9,539 |   |   |   | (180 | ) |   |   | 35,339 |   |   |   | (852 | ) |
| Totals                                 |   | $              | 50,116 |   |                | $  | (700   | )         |   | $  | 9,539 |   |   | $  | (180 | ) |   | $  | 59,655 |   |   | $  | (880 | ) |

----

|                              |   | Less than 12 Months |   |   | 12 Months or Longer |    |   | Total     |   |
|-----------------------------------|--------|---------------------|--------|--------|---------------------|---------|--------|-----------|--------|
| HELD TO MATURITY                  |   | FairValue           |   |   | UnrealizedLosses    |    |   | FairValue |   |   | UnrealizedLosses |   |   | FairValue |   |   | UnrealizedLosses |   |
|                              |   | (In thousands)      |   |
| June 30, 2012                     |   |                     |   |   |                     |    |   |           |   |   |  |   |   |  |   |   |  |   |
| States and political subdivisions |   | $              | -      |   |                | $  | -      |      |   | $  | 1,106 |   |   | $  | (132 | ) |   | $  | 1,106 |   |   | $  | (132 | ) |
| Totals                            |   | $              | -      |   |                | $  | -      |      |   | $  | 1,106 |   |   | $  | (132 | ) |   | $  | 1,106 |   |   | $  | (132 | ) |
|                              |   |                |   |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| December 31, 2011                 |   |                |   |   |                |    |   |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| States and political subdivisions |   | $              | -      |   |                | $  | -      |      |   | $  | 1,020 |   |   | $  | (163 | ) |   | $  | 1,020 |   |   | $  | (163 | ) |
| Totals                            |   | $              | -      |   |                | $  | -      |      |   | $  | 1,020 |   |   | $  | (163 | ) |   | $  | 1,020 |   |   | $  | (163 | ) |
|                                       |   | Available for Sale |    |   | Held to Maturity |    |    | Other Investments |   |
|--------------------------------------------|--------|--------------------|---------|--------|------------------|---------|---------|-------------------|--------|
|                                       |   | AmortizedCost      |    |   | FairValue        |    |    | AmortizedCost     |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                       |   | (In thousands)     |    |
| One year or less                           |   | $             | 16,888  |   |             | $  | 16,945  |              |   | $  | - |   |   | $  | - |   |   | $  | - |   |   | $  | - |   |
| One to five years                          |   |               | 71,995  |   |             |    | 72,167  |              |   |   | - |   |   |   | - |   |   |   | 150 |   |   |   | 150 |   |
| Five to ten years                          |   |               | 9,357   |   |             |    | 9,332   |              |   |   | 1,106 |   |   |   | 974 |   |   |   | - |   |   |   | - |   |
| Over ten years                             |   |               | 45,365  |   |             |    | 44,934  |              |   |   | 9,505 |   |   |   | 11,294 |   |   |   | 1,116 |   |   |   | 1,116 |   |
| Equity investments with no stated maturity |   |               | -       |   |             |    | -       |              |   |   | - |   |   |   | - |   |   |   | 7,150 |   |   |   | 7,150 |   |
|                                       |   | $             | 143,605 |   |             | $  | 143,378 |              |   | $  | 10,611 |   |   | $  | 12,268 |   |   | $  | 8,416 |   |   | $  | 8,416 |   |

----

|                      |   | June 30,2012   |      |   | December 31,2011 |    |
|---------------------------|--------|----------------|-----------|--------|------------------|---------|
|                      |   | Amount         |      |   | Amount           |    |
|                      |   | (In thousands) |      |
| Commercial                |   | $         | 169,543   |   |             | $  | 163,115 |   |
| Commercial real estate    |   |           | 456,106   |   |             |    | 448,991 |   |
| Residential real estate   |   |           | 382,443   |   |             |    | 385,404 |   |
| Construction real estate  |   |           | 132,326   |   |             |    | 161,803 |   |
| Installment and other     |   |           | 61,577    |   |             |    | 59,257 |   |
| Total loans               |   |           | 1,201,995 |   |             |    | 1,218,570 |   |
| Unearned income           |   |           | (2,751    | )      |             |    | (2,713 | ) |
| Gross loans               |   |           | 1,199,244 |   |             |    | 1,215,857 |   |
| Allowance for loan losses |   |           | (25,071   | )      |             |    | (27,909 | ) |
| Net loans                 |   | $         | 1,174,173 |   |             | $  | 1,187,948 |   |

----

----

|                               |   | Current        |      |   | 30-59 DaysPast Due |    |   | 60-89 DaysPast Due |   |    | Loans pastdue 90 daysor more |   |   | Total PastDue |   |   | Total  |    |
|------------------------------------|--------|----------------|-----------|--------|--------------------|---------|--------|--------------------|--------|---------|------------------------------|--------|--------|---------------|--------|--------|--------|---------|
| June 30, 2012:                     |   | (In thousands) |      |
| Commercial                         |   | $         | 167,612   |   |               | $  | 351    |               |   | $  | 191                          |   |   | $        | 1,389  |   |   | $  | 1,931 |   |   | $  | 169,543 |   |
| Commercial real estate             |   |           | 436,194   |   |               |    | 70     |               |   |    | 234                          |   |   |          | 19,608 |   |   |    | 19,912 |   |   |   | 456,106 |   |
| Residential real estate            |   |           | 372,371   |   |               |    | 2,395  |               |   |    | 1,017                        |   |   |          | 6,660  |   |   |    | 10,072 |   |   |   | 382,443 |   |
| Construction real estate           |   |           | 127,863   |   |               |    | 542    |               |   |    | 539                          |   |   |          | 3,382  |   |   |    | 4,463 |   |   |   | 132,326 |   |
| Installment and other              |   |           | 59,499    |   |               |    | 265    |               |   |    | 60                           |   |   |          | 1,753  |   |   |    | 2,078 |   |   |   | 61,577 |   |
| Total loans                        |   | $         | 1,163,539 |   |               | $  | 3,623  |               |   | $  | 2,041                        |   |   | $        | 32,792 |   |   | $  | 38,456 |   |   | $  | 1,201,995 |   |
|                               |   |           |      |   |               |    |   |               |   |    |                         |   |   |          |   |   |   |    |   |   |   |   |   |   |
| Non-performing loan classification |   | $         | 11,520    |   |               | $  | 80     |               |   | $  | 1,759                        |   |   | $        | 32,792 |   |   | $  | 34,631 |   |   | $  | 46,151 |   |
|                               |   |           |      |   |               |    |   |               |   |    |                         |   |   |          |   |   |   |    |   |   |   |   |   |   |
| December 31, 2011:                 |   |
| Commercial                         |   | $         | 160,755   |   |               | $  | 74     |               |   | $  | 239                          |   |   | $        | 2,047  |   |   | $  | 2,360 |   |   | $  | 163,115 |   |
| Commercial real estate             |   |           | 422,469   |   |               |    | 462    |               |   |    | 4,252                        |   |   |          | 21,808 |   |   |    | 26,522 |   |   |   | 448,991 |   |
| Residential real estate            |   |           | 375,052   |   |               |    | 1,884  |               |   |    | 877                          |   |   |          | 7,591  |   |   |    | 10,352 |   |   |   | 385,404 |   |
| Construction real estate           |   |           | 143,243   |   |               |    | 181    |               |   |    | 265                          |   |   |          | 18,114 |   |   |    | 18,560 |   |   |   | 161,803 |   |
| Installment and other              |   |           | 56,222    |   |               |    | 72     |               |   |    | 116                          |   |   |          | 2,847  |   |   |    | 3,035 |   |   |   | 59,257 |   |
| Total loans                        |   | $         | 1,157,741 |   |               | $  | 2,673  |               |   | $  | 5,749                        |   |   | $        | 52,407 |   |   | $  | 60,829 |   |   | $  | 1,218,570 |   |
|                               |   |           |      |   |               |    |   |               |   |    |                         |   |   |          |   |   |   |    |   |   |   |   |   |   |
| Non-performing loan classification |   | $         | 1,891     |   |               | $  | 131    |               |   | $  | 5,040                        |   |   | $        | 52,407 |   |   | $  | 57,578 |   |   | $  | 59,469 |   |
|                     |   | June 30, 2012  |   |   | December 31, 2011                                       |    |
|--------------------------|--------|----------------|--------|--------|---------------------------------------------------------|---------|
|                     |   | Nonaccrual     |   |   | Loans pastdue 90 daysor more andstill accruing interest |    |   | Nonaccrual |   |   | Loans pastdue 90 daysor more andstill accruinginterest |   |
|                     |   | (In thousands) |   |
| Commercial               |   | $         | 3,950  |   |                                                    | $  | - |   |   | $  | 2,116 |   |   | $  | - |   |
| Commercial real estate   |   |           | 25,429 |   |                                                    |    | - |   |   |   | 26,369 |   |   |   | - |   |
| Residential real estate  |   |           | 10,642 |   |                                                    |    | - |   |   |   | 9,608 |   |   |   | - |   |
| Construction real estate |   |           | 4,194  |   |                                                    |    | - |   |   |   | 18,226 |   |   |   | - |   |
| Installment and other    |   |           | 1,936  |   |                                                    |    | - |   |   |   | 3,150 |   |   |   | - |   |
| Total                    |   | $         | 46,151 |   |                                                    | $  | - |   |   | $  | 59,469 |   |   | $  | - |   |

----

|                     |   | Pass           |      |   | Special Mention |    |   | Substandard |   |    | Doubtful |   |   | Total   |   |
|--------------------------|--------|----------------|-----------|--------|-----------------|---------|--------|-------------|--------|---------|----------|--------|--------|---------|--------|
| June 30, 2012:           |   | (In thousands) |      |
| Commercial               |   | $         | 160,551   |   |            | $  | 2,044  |        |   | $  | 5,118    |   |   | $  | 1,830  |   |   | $  | 169,543 |   |
| Commercial real estate   |   |           | 414,860   |   |            |    | 995    |        |   |    | 39,404   |   |   |    | 847    |   |   |   | 456,106 |   |
| Residential real estate  |   |           | 367,441   |   |            |    | -      |        |   |    | 14,175   |   |   |    | 827    |   |   |   | 382,443 |   |
| Construction real estate |   |           | 119,363   |   |            |    | 6,338  |        |   |    | 6,000    |   |   |    | 625    |   |   |   | 132,326 |   |
| Installment and other    |   |           | 60,778    |   |            |    | -      |        |   |    | 762      |   |   |    | 37     |   |   |   | 61,577 |   |
| Total                    |   | $         | 1,122,993 |   |            | $  | 9,377  |        |   | $  | 65,459   |   |   | $  | 4,166  |   |   | $  | 1,201,995 |   |
|                     |   |           |      |   |            |    |   |        |   |    |     |   |   |    |   |   |   |   |   |   |
| December 31, 2011:       |   |
| Commercial               |   | $         | 156,926   |   |            | $  | 372    |        |   | $  | 5,817    |   |   | $  | -      |   |   | $  | 163,115 |   |
| Commercial real estate   |   |           | 409,099   |   |            |    | 1,007  |        |   |    | 38,885   |   |   |    | -      |   |   |   | 448,991 |   |
| Residential real estate  |   |           | 371,605   |   |            |    | -      |        |   |    | 13,799   |   |   |    | -      |   |   |   | 385,404 |   |
| Construction real estate |   |           | 126,848   |   |            |    | 12,760 |        |   |    | 22,195   |   |   |    | -      |   |   |   | 161,803 |   |
| Installment and other    |   |           | 57,119    |   |            |    | -      |        |   |    | 2,138    |   |   |    | -      |   |   |   | 59,257 |   |
| Total                    |   | $         | 1,121,597 |   |            | $  | 14,139 |        |   | $  | 82,834   |   |   | $  | -      |   |   | $  | 1,218,570 |   |
|                     |   | Pass           |      |   | Special Mention |    |   | Substandard |   |    | Doubtful |   |   | Total   |   |
|--------------------------|--------|----------------|-----------|--------|-----------------|---------|--------|-------------|--------|---------|----------|--------|--------|---------|--------|
| June 30, 2012:           |   | (In thousands) |      |
| Current                  |   | $         | 1,119,196 |   |            | $  | 9,377  |        |   | $  | 31,307   |   |   | $  | 3,659  |   |   | $  | 1,163,539 |   |
| Past due 30-59 days      |   |           | 3,543     |   |            |    | -      |        |   |    | 80       |   |   |    | -      |   |   |   | 3,623 |   |
| Past due 60-89 days      |   |           | 254       |   |            |    | -      |        |   |    | 1,280    |   |   |    | 507    |   |   |   | 2,041 |   |
| Past due 90 days or more |   |           | -         |   |            |    | -      |        |   |    | 32,792   |   |   |    | -      |   |   |   | 32,792 |   |
| Total                    |   | $         | 1,122,993 |   |            | $  | 9,377  |        |   | $  | 65,459   |   |   | $  | 4,166  |   |   | $  | 1,201,995 |   |
|                     |   |           |      |   |            |    |   |        |   |    |     |   |   |    |   |   |   |   |   |   |
| December 31, 2011:       |   |
| Current                  |   | $         | 1,120,868 |   |            | $  | 14,139 |        |   | $  | 22,734   |   |   | $  | -      |   |   | $  | 1,157,741 |   |
| Past due 30-59 days      |   |           | 611       |   |            |    | -      |        |   |    | 2,062    |   |   |    | -      |   |   |   | 2,673 |   |
| Past due 60-89 days      |   |           | 118       |   |            |    | -      |        |   |    | 5,631    |   |   |    | -      |   |   |   | 5,749 |   |
| Past due 90 days or more |   |           | -         |   |            |    | -      |        |   |    | 52,407   |   |   |    | -      |   |   |   | 52,407 |   |
| Total                    |   | $         | 1,121,597 |   |            | $  | 14,139 |        |   | $  | 82,834   |   |   | $  | -      |   |   | $  | 1,218,570 |   |

----

|                                |   | June 30, 2012            |   |   | December 31, 2011   |    |
|-------------------------------------|--------|--------------------------|--------|--------|---------------------|---------|
|                                |   | Unpaid Principal Balance |   |   | Recorded Investment |    |   | Allowance for Loan Losses Allocated |   |   | Unpaid Principal Balance |   |   | Recorded Investment |   |   | Allowance for Loan Losses Allocated |   |
|                                |   | (In thousands)           |   |
| With no related allowance recorded: |   |
| Commercial                          |   | $                   | 4,576  |   |                | $  | 2,938 |   |   | $  | - |   |   | $  | 5,373 |   |   | $  | 3,802 |   |   | $  | - |   |
| Commercial real estate              |   |                     | 30,764 |   |                |    | 27,378 |   |   |   | - |   |   |   | 36,930 |   |   |   | 36,879 |   |   |   | - |   |
| Residential real estate             |   |                     | 8,095  |   |                |    | 7,106 |   |   |   | - |   |   |   | 4,521 |   |   |   | 4,240 |   |   |   | - |   |
| Construction real estate            |   |                     | 5,653  |   |                |    | 3,861 |   |   |   | - |   |   |   | 20,024 |   |   |   | 19,386 |   |   |   | - |   |
| Installment and other               |   |                     | 342    |   |                |    | 320 |   |   |   | - |   |   |   | 112 |   |   |   | 112 |   |   |   | - |   |
| With an allowance recorded:         |   |
| Commercial                          |   |                     | 4,292  |   |                |    | 2,700 |   |   |   | 433 |   |   |   | 687 |   |   |   | 687 |   |   |   | 56 |   |
| Commercial real estate              |   |                     | 675    |   |                |    | 675 |   |   |   | 84 |   |   |   | 794 |   |   |   | 794 |   |   |   | 49 |   |
| Residential real estate             |   |                     | 7,125  |   |                |    | 7,123 |   |   |   | 1,781 |   |   |   | 6,316 |   |   |   | 6,316 |   |   |   | 953 |   |
| Construction real estate            |   |                     | 112    |   |                |    | 110 |   |   |   | 32 |   |   |   | 262 |   |   |   | 262 |   |   |   | 6 |   |
| Installment and other               |   |                     | 806    |   |                |    | 804 |   |   |   | 167 |   |   |   | 712 |   |   |   | 713 |   |   |   | 115 |   |
| Total                               |   | $                   | 62,440 |   |                | $  | 53,015 |   |   | $  | 2,497 |   |   | $  | 75,731 |   |   | $  | 73,191 |   |   | $  | 1,179 |   |
|                                |   | Three Months Ended         |   |   | Six Months Ended           |    |
|-------------------------------------|--------|----------------------------|--------|--------|----------------------------|---------|
|                                |   | June 30, 2012              |   |   | June 30, 2011              |    |   | June 30, 2012 |   |   | June 30, 2011 |   |
|                                |   | AverageRecorded Investment |   |   | Interest Income Recognized |    |   | Average Recorded Investment |   |   | Interest Income Recognized |   |   | Average Recorded Investment |   |   | InterestIncome Recognized |   |   | Average Recorded Investment |   |   | Interest Income Recognized |   |
|                                |   | (In thousands)             |   |
| With no related allowance recorded: |   |
| Commercial                          |   | $                     | 4,071  |   |                       | $  | 19 |   |   | $  | 2,648 |   |   | $  | 4 |   |   | $  | 4,638 |   |   | $  | 58 |   |   | $  | 2,691 |   |   | $  | 9 |   |
| Commercial real estate              |   |                       | 30,390 |   |                       |    | 13 |   |   |   | 19,053 |   |   |   | - |   |   |   | 31,896 |   |   |   | 15 |   |   |   | 20,392 |   |   |   | 14 |   |
| Residential real estate             |   |                       | 6,017  |   |                       |    | 16 |   |   |   | 14,457 |   |   |   | 1 |   |   |   | 5,472 |   |   |   | 97 |   |   |   | 13,861 |   |   |   | 15 |   |
| Construction real estate            |   |                       | 11,468 |   |                       |    | 5 |   |   |   | 20,887 |   |   |   | 354 |   |   |   | 15,272 |   |   |   | 5 |   |   |   | 20,242 |   |   |   | 357 |   |
| Installment and other               |   |                       | 357    |   |                       |    | 4 |   |   |   | 3,076 |   |   |   | 4 |   |   |   | 376 |   |   |   | 11 |   |   |   | 3,039 |   |   |   | 10 |   |
| With an allowance recorded:         |   |
| Commercial                          |   | $                     | 1,844  |   |                       | $  | 12 |   |   | $  | 1,766 |   |   | $  | 7 |   |   | $  | 1,416 |   |   | $  | 12 |   |   | $  | 1,284 |   |   | $  | 14 |   |
| Commercial real estate              |   |                       | 792    |   |                       |    | 9 |   |   |   | 379 |   |   |   | 5 |   |   |   | 851 |   |   |   | 9 |   |   |   | 379 |   |   |   | 10 |   |
| Residential real estate             |   |                       | 7,096  |   |                       |    | 57 |   |   |   | 4,245 |   |   |   | 36 |   |   |   | 7,083 |   |   |   | 58 |   |   |   | 3,899 |   |   |   | 70 |   |
| Construction real estate            |   |                       | 104    |   |                       |    | - |   |   |   | - |   |   |   | - |   |   |   | 101 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Installment and other               |   |                       | 760    |   |                       |    | 7 |   |   |   | 1,233 |   |   |   | 6 |   |   |   | 738 |   |   |   | 8 |   |   |   | 1,024 |   |   |   | 11 |   |
| Total                               |   | $                     | 62,899 |   |                       | $  | 142 |   |   | $  | 67,744 |   |   | $  | 417 |   |   | $  | 67,843 |   |   | $  | 273 |   |   | $  | 66,811 |   |   | $  | 510 |   |

----

|                                |   | Commercial     |   |   | Commercialreal estate |    |   | Residentialreal estate |   |    | Construction real estate |   |   | Installmentand other |   |   | Unallocated |    |   | Total  |   |
|-------------------------------------|--------|----------------|--------|--------|-----------------------|---------|--------|------------------------|--------|---------|--------------------------|--------|--------|----------------------|--------|--------|-------------|---------|--------|--------|--------|
|                                |   | (In thousands) |   |
| Three Months Ended June 30, 2012:   |   |
| Beginning balance                   |   | $         | 4,414  |   |                  | $  | 8,680  |                   |   | $  | 5,575                    |   |   | $               | 5,127  |   |        | $  | 3,466  |   |   | $  | - |   |   | $  | 27,262 |   |
| Provision for loan losses           |   |           | 4,884  |   |                  |    | 1,222  |                   |   |    | 1,672                    |   |   |                 | 1,077  |   |        |    | 900    |   |   |   | - |   |   |   | 9,755 |   |
| Charge-offs                         |   |           | (4,401 | )      |                  |    | (3,515 | )                      |   |    | (956                     | )      |   |                 | (2,163 | )      |        |    | (1,356 | )      |   |   | - |   |   |   | (12,391 | ) |
| Recoveries                          |   |           | 238    |   |                  |    | 25     |                   |   |    | 17                       |   |   |                 | 140    |   |        |    | 25     |   |   |   | - |   |   |   | 445 |   |
| Net charge-offs                     |   |           | (4,163 | )      |                  |    | (3,490 | )                      |   |    | (939                     | )      |   |                 | (2,023 | )      |        |    | (1,331 | )      |   |   | - |   |   |   | (11,946 | ) |
| Ending balance                      |   | $         | 5,135  |   |                  | $  | 6,412  |                   |   | $  | 6,308                    |   |   | $               | 4,181  |   |        | $  | 3,035  |   |   | $  | - |   |   | $  | 25,071 |   |
|                                |   |           |   |   |                  |    |   |                   |   |    |                     |   |   |                 |   |   |        |    |   |   |   |   |   |   |   |   |   |   |
| Three Months Ended June 30, 2011:   |   |
| Beginning balance                   |   | $         | 5,582  |   |                  | $  | 7,344  |                   |   | $  | 4,724                    |   |   | $               | 6,695  |   |        | $  | 4,039  |   |   | $  | - |   |   | $  | 28,384 |   |
| Provision (benefit) for loan losses |   |           | 214    |   |                  |    | (52    | )                      |   |    | 1,352                    |   |   |                 | 675    |   |        |    | (60    | )      |   |   | - |   |   |   | 2,129 |   |
| Charge-offs                         |   |           | (592   | )      |                  |    | (151   | )                      |   |    | (1,089                   | )      |   |                 | (1,216 | )      |        |    | (96    | )      |   |   | - |   |   |   | (3,144 | ) |
| Recoveries                          |   |           | 3      |   |                  |    | 8      |                   |   |    | 46                       |   |   |                 | 97     |   |        |    | 20     |   |   |   | - |   |   |   | 174 |   |
| Net charge-offs                     |   |           | (589   | )      |                  |    | (143   | )                      |   |    | (1,043                   | )      |   |                 | (1,119 | )      |        |    | (76    | )      |   |   | - |   |   |   | (2,970 | ) |
| Ending balance                      |   | $         | 5,207  |   |                  | $  | 7,149  |                   |   | $  | 5,033                    |   |   | $               | 6,251  |   |        | $  | 3,903  |   |   | $  | - |   |   | $  | 27,543 |   |

----

|                                |   | Commercial     |   |   | Commercialreal estate |    |   | Residentialreal estate |   |    | Construction real estate |   |   | Installmentand other |   |   | Unallocated |    |   | Total  |   |
|-------------------------------------|--------|----------------|--------|--------|-----------------------|---------|--------|------------------------|--------|---------|--------------------------|--------|--------|----------------------|--------|--------|-------------|---------|--------|--------|--------|
|                                |   | (In thousands) |   |
| Six Months Ended June 30, 2012:     |   |
| Beginning balance                   |   | $         | 3,949  |   |                  | $  | 8,486  |                   |   | $  | 5,249                    |   |   | $               | 5,984  |   |        | $  | 4,067  |   |   | $  | 174 |   |   | $  | 27,909 |   |
| Provision (benefit) for loan losses |   |           | 5,673  |   |                  |    | 1,468  |                   |   |    | 3,337                    |   |   |                 | 1,117  |   |        |    | 453    |   |   |   | (174 | ) |   |   | 11,874 |   |
| Charge-offs                         |   |           | (4,771 | )      |                  |    | (3,567 | )                      |   |    | (2,305                   | )      |   |                 | (3,151 | )      |        |    | (1,527 | )      |   |   | - |   |   |   | (15,321 | ) |
| Recoveries                          |   |           | 284    |   |                  |    | 25     |                   |   |    | 27                       |   |   |                 | 231    |   |        |    | 42     |   |   |   | - |   |   |   | 609 |   |
| Net charge-offs                     |   |           | (4,487 | )      |                  |    | (3,542 | )                      |   |    | (2,278                   | )      |   |                 | (2,920 | )      |        |    | (1,485 | )      |   |   | - |   |   |   | (14,712 | ) |
| Ending balance                      |   | $         | 5,135  |   |                  | $  | 6,412  |                   |   | $  | 6,308                    |   |   | $               | 4,181  |   |        | $  | 3,035  |   |   | $  | - |   |   | $  | 25,071 |   |
|                                |   |           |   |   |                  |    |   |                   |   |    |                     |   |   |                 |   |   |        |    |   |   |   |   |   |   |   |   |   |   |
| Six Months Ended June 30, 2011:     |   |
| Beginning balance                   |   | $         | 5,857  |   |                  | $  | 7,010  |                   |   | $  | 4,093                    |   |   | $               | 7,322  |   |        | $  | 4,122  |   |   | $  | 318 |   |   | $  | 28,722 |   |
| Provision (benefit) for loan losses |   |           | 215    |   |                  |    | 513    |                   |   |    | 2,911                    |   |   |                 | 123    |   |        |    | 135    |   |   |   | (318 | ) |   |   | 3,579 |   |
| Charge-offs                         |   |           | (878   | )      |                  |    | (391   | )                      |   |    | (2,194                   | )      |   |                 | (1,305 | )      |        |    | (398   | )      |   |   | - |   |   |   | (5,166 | ) |
| Recoveries                          |   |           | 13     |   |                  |    | 17     |                   |   |    | 223                      |   |   |                 | 111    |   |        |    | 44     |   |   |   | - |   |   |   | 408 |   |
| Net charge-offs                     |   |           | (865   | )      |                  |    | (374   | )                      |   |    | (1,971                   | )      |   |                 | (1,194 | )      |        |    | (354   | )      |   |   | - |   |   |   | (4,758 | ) |
| Ending balance                      |   | $         | 5,207  |   |                  | $  | 7,149  |                   |   | $  | 5,033                    |   |   | $               | 6,251  |   |        | $  | 3,903  |   |   | $  | - |   |   | $  | 27,543 |   |
|                                        |   | Commercial     |    |   | Commercialreal estate |    |    | Residentialreal estate |   |    | Construction real estate |   |   | Installmentand other |    |   | Unallocated |    |   | Total  |   |
|---------------------------------------------|--------|----------------|---------|--------|-----------------------|---------|---------|------------------------|--------|---------|--------------------------|--------|--------|----------------------|---------|--------|-------------|---------|--------|--------|--------|
|                                        |   | (In thousands) |    |
| June 30, 2012                               |   |                |    |   |                       |    |    |                        |   |    |                          |   |   |                      |    |   |             |    |   |        |   |
| Period-end amount allocated to:             |   |
| Loans individually evaluated for impairment |   | $         | 433     |   |                  | $  | 84      |                   |   | $  | 32                       |   |   | $               | 1,781   |   |        | $  | 167    |   |   | $  | - |   |   | $  | 2,497 |   |
| Loans collectively evaluated for impairment |   |           | 4,702   |   |                  |    | 6,328   |                   |   |    | 6,276                    |   |   |                 | 2,400   |   |        |    | 2,868  |   |   |   | - |   |   |   | 22,574 |   |
| Ending balance                              |   | $         | 5,135   |   |                  | $  | 6,412   |                   |   | $  | 6,308                    |   |   | $               | 4,181   |   |        | $  | 3,035  |   |   | $  | - |   |   | $  | 25,071 |   |
| Loans:                                      |   |           |    |   |                  |    |    |                   |   |    |                     |   |   |                 |    |   |        |    |   |   |   |
| Individually evaluated for impairment       |   | $         | 5,638   |   |                  | $  | 28,053  |                   |   | $  | 3,971                    |   |   | $               | 14,229  |   |        | $  | 1,124  |   |   | $  | - |   |   | $  | 53,015 |   |
| Collectively evaluated for impairment       |   |           | 163,905 |   |                  |    | 428,053 |                   |   |    | 378,472                  |   |   |                 | 118,097 |   |        |    | 60,453 |   |   |   | - |   |   |   | 1,148,980 |   |
| Total ending loans balance                  |   | $         | 169,543 |   |                  | $  | 456,106 |                   |   | $  | 382,443                  |   |   | $               | 132,326 |   |        | $  | 61,577 |   |   | $  | - |   |   | $  | 1,201,995 |   |

----

|                                        |   | Commercial     |    |   | Commercialreal estate |    |    | Residentialreal estate |   |    | Construction real estate |   |   | Installmentand other |    |   | Unallocated |    |   | Total  |   |
|---------------------------------------------|--------|----------------|---------|--------|-----------------------|---------|---------|------------------------|--------|---------|--------------------------|--------|--------|----------------------|---------|--------|-------------|---------|--------|--------|--------|
|                                        |   | (In thousands) |    |
| December 31, 2011                           |   |           |         |   |                  |         |    |                   |        |    |                     |        |   |                 |         |   |        |         |   |
| Period-end amount allocated to:             |   |
| Loans individually evaluated for impairment |   | $         | 56      |   |                  | $  | 49      |                   |   | $  | 953                      |   |   | $               | 6       |   |        | $  | 115    |   |   | $  | - |   |   | $  | 1,179 |   |
| Loans collectively evaluated for impairment |   |           | 3,893   |   |                  |    | 8,437   |                   |   |    | 4,296                    |   |   |                 | 5,978   |   |        |    | 3,952  |   |   |   | 174 |   |   |   | 26,730 |   |
| Ending balance                              |   | $         | 3,949   |   |                  | $  | 8,486   |                   |   | $  | 5,249                    |   |   | $               | 5,984   |   |        | $  | 4,067  |   |   | $  | 174 |   |   | $  | 27,909 |   |
| Loans:                                      |   |           |    |   |                  |    |    |                   |   |    |                     |   |   |                 |    |   |        |    |   |   |   |
| Individually evaluated for impairment       |   | $         | 4,489   |   |                  | $  | 37,673  |                   |   | $  | 10,556                   |   |   | $               | 19,648  |   |        | $  | 825    |   |   | $  | - |   |   | $  | 73,191 |   |
| Collectively evaluated for impairment       |   |           | 158,626 |   |                  |    | 411,318 |                   |   |    | 374,848                  |   |   |                 | 142,155 |   |        |    | 58,432 |   |   |   | - |   |   |   | 1,145,379 |   |
| Total ending loans balance                  |   | $         | 163,115 |   |                  | $  | 448,991 |                   |   | $  | 385,404                  |   |   | $               | 161,803 |   |        | $  | 59,257 |   |   | $  | - |   |   | $  | 1,218,570 |   |
|                         |   | Three Months Ended June 30, 2012 |   |
|------------------------------|--------|----------------------------------|--------|
|                         |   | Number of Contracts              |   |   | Pre-Modification Outstanding Recorded Investment |   |   | Post-Modification Outstanding Recorded Investment |   |   | Specific reserves allocated |   |
|                         |   | (In thousands)                   |   |
| Troubled Debt Restructurings |   |
| Commercial                   |   |                             | 6      |   |   | $  | 3,217 |   |   | $  | 1,626 |   |   | $  | - |   |
| Commercial real estate       |   |                             | 2      |   |   |   | 1,367 |   |   |   | 1,367 |   |   |   | - |   |
| Residential real estate      |   |                             | 9      |   |   |   | 2,115 |   |   |   | 2,113 |   |   |   | 581 |   |
| Construction real estate     |   |                             | 1      |   |   |   | 261 |   |   |   | 257 |   |   |   | - |   |
| Installment and other        |   |                             | 4      |   |   |   | 161 |   |   |   | 161 |   |   |   | 19 |   |
| Total                        |   |                             | 22     |   |   | $  | 7,121 |   |   | $  | 5,524 |   |   | $  | 600 |   |

----

|                         |   | Six Months Ended June 30, 2012 |   |
|------------------------------|--------|--------------------------------|--------|
|                         |   | Number of Contracts            |   |   | Pre-Modification Outstanding Recorded Investment |   |   | Post-Modification Outstanding Recorded Investment |   |   | Specific reserves allocated |   |
|                         |   | (In thousands)                 |   |
| Troubled Debt Restructurings |   |
| Commercial                   |   |                           | 7      |   |   | $  | 3,375 |   |   | $  | 1,784 |   |   | $  | 7 |   |
| Commercial real estate       |   |                           | 2      |   |   |   | 1,367 |   |   |   | 1,367 |   |   |   | - |   |
| Residential real estate      |   |                           | 13     |   |   |   | 2,713 |   |   |   | 2,711 |   |   |   | 742 |   |
| Construction real estate     |   |                           | 2      |   |   |   | 337 |   |   |   | 333 |   |   |   | 31 |   |
| Installment and other        |   |                           | 6      |   |   |   | 287 |   |   |   | 286 |   |   |   | 71 |   |
| Total                        |   |                           | 30     |   |   | $  | 8,079 |   |   | $  | 6,481 |   |   | $  | 851 |   |
|                                                     |   | Three Months Ended June 30, 2012 |   |   | Six Months Ended June 30, 2012 |    |
|----------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|---------|
|                                                     |   | Number of Contracts              |   |   | Recorded Investment            |    |   | Specific reserves allocated |   |   | Number of Contracts |   |   | Recorded Investment |   |   | Specific reserves allocated |   |
|                                                     |   | (In thousands)                   |   |
| Troubled Debt Restructurings That Subsequently Defaulted |   |
| Commercial                                               |   |                             | -      |   |                           | $  | - |   |   | $  | - |   |   |   | - |   |   | $  | - |   |   | $  | - |   |
| Commercial real estate                                   |   |                             | -      |   |                           |    | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Residential real estate                                  |   |                             | -      |   |                           |    | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Construction real estate                                 |   |                             | 1      |   |                           |    | 257 |   |   |   | - |   |   |   | 1 |   |   |   | 257 |   |   |   | - |   |
| Installment and other                                    |   |                             | -      |   |                           |    | - |   |   |   | - |   |   |   | 1 |   |   |   | 35 |   |   |   | - |   |
| Total                                                    |   |                             | 1      |   |                           | $  | 257 |   |   | $  | - |   |   |   | 2 |   |   | $  | 292 |   |   | $  | - |   |

----

|                                        |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|---------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                        |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                        |   | (In thousands)             |   |
| Balance at beginning of period              |   | $                     | 9,457  |   |                     | $  | 9,145 |   |   | $  | 9,188 |   |   | $  | 9,030 |   |
| Servicing rights originated and capitalized |   |                       | 756    |   |                     |    | 203 |   |   |   | 1,417 |   |   |   | 701 |   |
| Amortization                                |   |                       | (402   | )      |                     |    | (373 | ) |   |   | (794 | ) |   |   | (756 | ) |
|                                        |   | $                     | 9,811  |   |                     | $  | 8,975 |   |   | $  | 9,811 |   |   | $  | 8,975 |   |
|                                        |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|---------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                        |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                        |   | (In thousands)             |   |
| Balance at beginning of period              |   | $                     | (2,379 | )      |                     | $  | (990 | ) |   | $  | (2,938 | ) |   | $  | (1,070 | ) |
| Aggregate reductions credited to operations |   |                       | -      |   |                     |    | - |   |   |   | 574 |   |   |   | 80 |   |
| Aggregate additions charged to operations   |   |                       | (793   | )      |                     |    | (128 | ) |   |   | (808 | ) |   |   | (128 | ) |
|                                        |   | $                     | (3,172 | )      |                     | $  | (1,118 | ) |   | $  | (3,172 | ) |   | $  | (1,118 | ) |
|                                      |   | June 30,2012 |   |   | December 31, 2011 |   |
|-------------------------------------------|--------|--------------|--------|--------|-------------------|--------|
| Public Securities Association (PSA) speed |   |         | 293.33 | %      |              |   | 320.00 | % |
| Discount rate                             |   |         | 10.75  |   |              |   | 10.75 |   |
| Earnings rate                             |   |         | 0.97   |   |              |   | 1.22 |   |

----

|                    |   | AtJune 30,2012 |   |   | AtDecember 31, 2011 |    |
|-------------------------|--------|----------------|--------|--------|---------------------|---------|
|                    |   | (In thousands) |   |
| Construction property   |   | $         | 24,779 |   |                | $  | 6,918 |   |
| Residential real estate |   |           | 2,353  |   |                |    | 2,908 |   |
| Commercial real estate  |   |           | 3,067  |   |                |    | 4,313 |   |
| Total                   |   | $         | 30,199 |   |                | $  | 14,139 |   |
|                                                         |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|--------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                                         |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                                         |   | (In thousands)             |   |
| Balance at beginning of period                               |   | $                     | 15,575 |   |                     | $  | 21,218 |   |   | $  | 14,139 |   |   | $  | 21,860 |   |
| Transfers into other real estate owned from loans            |   |                       | 19,190 |   |                     |    | 2,206 |   |   |   | 23,342 |   |   |   | 3,402 |   |
| Sales of other real estate owned                             |   |                       | (477   | )      |                     |    | (2,317 | ) |   |   | (576 | ) |   |   | (3,493 | ) |
| Loss on sales of other real estate owned                     |   |                       | (56    | )      |                     |    | (711 | ) |   |   | (165 | ) |   |   | (847 | ) |
| Sales of other real estate owned financed by loans           |   |                       | (3,461 | )      |                     |    | (5,400 | ) |   |   | (5,099 | ) |   |   | (5,400 | ) |
| Adjustment to valuation allowance on other real estate owned |   |                       | (572   | )      |                     |    | (1,020 | ) |   |   | (1,442 | ) |   |   | (1,546 | ) |
| Balance at end of period                                     |   | $                     | 30,199 |   |                     | $  | 13,976 |   |   | $  | 30,199 |   |   | $  | 13,976 |   |
| Maturity Date          |   | Rate   |   | Principal due |        | Amount |   |
|------------------------|--------|--------|--------|---------------|-------------|--------|--------|
| (Dollars in thousands) |   |
| 03/23/2015             |   |   | 3.05 % |          | At maturity |   | $      | 20,000 |   |
| 04/27/2021             |   |   | 6.34 % |          | At maturity |   |   | 2,300 |   |
|                   |   |   |   |          |        |   | $      | 22,300 |   |

----

|                                                       |   | Trust I                |   |   | Trust III         |             |   | Trust IV          |   |   | Trust V            |   |
|------------------------------------------------------------|--------|------------------------|--------|--------|-------------------|------------------|--------|-------------------|--------|--------|--------------------|--------|
|                                                       |   | (Dollars in thousands) |   |
| Date of Issue                                              |   | March 23, 2000         |   |   | May 11, 2004      |             |   | June 29, 2005     |   |   | September 21, 2006 |   |
| Amount of trust preferred securities issued                |   | $                      | 10,000 |   |              | $                | 6,000  |              |   | $      | 10,000             |   |   | $ | 10,000 |   |
| Rate on trust preferred securities                         |   |                   | 10.88  | %      |              | 3.17% (variable) |   |              |   | 6.88   | %                  |   |   | 2.12% (variable) |   |
| Maturity                                                   |   | March 8, 2030          |   |   | September 8, 2034 |             |   | November 23, 2035 |   |   | December 15, 2036  |   |
| Date of first redemption                                   |   | March 8, 2010          |   |   | September 8, 2009 |             |   | August 23, 2010   |   |   | September 15, 2011 |   |
| Common equity securities issued                            |   | $                      | 310    |   |              | $                | 186    |              |   | $      | 310                |   |   | $ | 310 |   |
| Junior subordinated deferrable interest debentures owed    |   | $                      | 10,310 |   |              | $                | 6,186  |              |   | $      | 10,310             |   |   | $ | 10,310 |   |
| Rate on junior subordinated deferrable interest debentures |   |                   | 10.88  | %      |              | 3.17% (variable) |   |              |   | 6.88   | %                  |   |  21 | 2.12% (variable) |   |

----

|                                       |   | Contract Amount |    |
|--------------------------------------------|--------|-----------------|---------|
|                                       |   | June 30,2012    |    |   | December 31,2011 |   |
|                                       |   | (In thousands)  |    |
| Unfunded commitments under lines of credit |   | $          | 160,137 |   |   | $  | 165,633 |   |
| Commercial and standby letters of credit   |   |            | 15,160  |   |   |   | 14,342 |   |

----

|                                           | Number ofshares issued | Dividend rate                           |   | Liquidation value per share |   |   | Original cost, in thousands |   |
|------------------------------------------------|------------------------|-----------------------------------------|--------|-----------------------------|--------|--------|-----------------------------|--------|
| Series A cumulative perpetual preferred shares | 35,539                 | 5% for the first 5 years, thereafter 9% |   | $                           | 1,000  |   |                        | $      | 33,437 |   |
| Series B cumulative perpetual preferred shares | 1,777                  | 9%                                      |   |                        | 1,000  |   |                        |   | 2,102 |   |

----

|                                    |   | AtJune 30,2012 |   |   | AtDecember 31, 2011 |    |
|-----------------------------------------|--------|----------------|--------|--------|---------------------|---------|
|                                    |   | (In thousands) |   |
| Notional amount of IRLC with customers  |   | $         | 13,857 |   |                | $  | 11,752 |   |
| Fair value of customer IRLC assets      |   |           | 472    |   |                |    | 269 |   |
| Fair value of customer IRLC liabilities |   |           | 13     |   |                |    | - |   |
| Notional amount of IRLC with FNMA       |   |           | 22,881 |   |                |    | 35,476 |   |
| Fair value of FNMA IRLC assets          |   |           | 13     |   |                |    | 1 |   |
| Fair value of FNMA IRLC liabilities     |   |           | 11     |   |                |    | 222 |   |

----

| · | Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.                                                                                                |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| · | Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. |
| · | Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| June 30, 2012                                                                        |   | Total          |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |    |   | Significant Other Observable Inputs(Level 2) |   |    | Significant Unobservable Inputs(Level 3) |   |
|--------------------------------------------------------------------------------------|--------|----------------|---------|--------|---------------------------------------------------------------|---------|--------|----------------------------------------------|--------|---------|------------------------------------------|--------|
|                                                                                 |   | (In thousands) |    |
| Financial Assets:                                                                    |   |                |    |   |                                                               |    |   |                                              |   |    |                                          |   |
| Investment securities available for sale:                                            |   |                |    |   |                                                               |    |   |                                              |   |    |                                          |   |
| U.S. Government sponsored agencies                                                   |   | $         | 79,617  |   |                                                          | $  | -      |                                         |   | $  | 79,617                                   |   |   | $  | - |   |
| States and political subdivisions                                                    |   |           | 5,645   |   |                                                          |    | -      |                                         |   |    | 5,645                                    |   |   |   | - |   |
| Residential mortgage-backed securities                                               |   |           | 58,116  |   |                                                          |    | -      |                                         |   |    | 58,116                                   |   |   |   | - |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   |           | 485     |   |                                                          |    | -      |                                         |   |    | 485                                      |   |   |   | - |   |
| Total                                                                                |   | $         | 143,863 |   |                                                          |    | -      |                                         |   | $  | 143,863                                  |   |   |   | - |   |
|                                                                                 |   |           |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Financial Liabilities:                                                               |   |           |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   | $         | 24      |   |                                                          | $  | -      |                                         |   | $  | 24                                       |   |   | $  | - |   |
|                                                                                 |   |           |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Off-balance-sheet instruments:                                                       |   |           |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Loan commitments and standby letters of credit                                       |   | $         | 19      |   |                                                          | $  | -      |                                         |   | $  | 19                                       |   |   | $  | - |   |

----

| December 31, 2011                                                                    |   | Total   |    |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |    |   | Significant Other Observable Inputs(Level 2) |   |    | Significant Unobservable Inputs(Level 3) |   |
|--------------------------------------------------------------------------------------|--------|---------|---------|--------|---------------------------------------------------------------|---------|--------|----------------------------------------------|--------|---------|------------------------------------------|--------|
|                                                                                 |   |         |    |   |                                                               |    |   |                                              |   |    |                                          |   |
| Financial Assets:                                                                    |   |         |    |   |                                                               |    |   |                                              |   |    |                                          |   |
| Investment securities available for sale:                                            |   |         |    |   |                                                               |    |   |                                              |   |    |                                          |   |
| U.S. Government sponsored agencies                                                   |   | $  | 60,575  |   |                                                          | $  | -      |                                         |   | $  | 60,575                                   |   |   | $  | - |   |
| States and political subdivisions                                                    |   |    | 6,030   |   |                                                          |    | -      |                                         |   |    | 6,030                                    |   |   |   | - |   |
| Residential mortgage-backed securities                                               |   |    | 68,106  |   |                                                          |    | -      |                                         |   |    | 68,106                                   |   |   |   | - |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   |    | 270     |   |                                                          |    | -      |                                         |   |    | 270                                      |   |   |   | - |   |
| Total                                                                                |   | $  | 134,981 |   |                                                          |    | -      |                                         |   | $  | 134,981                                  |   |   |   | - |   |
|                                                                                 |   |    |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Financial Liabilities:                                                               |   |    |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   | $  | 222     |   |                                                          | $  | -      |                                         |   | $  | 222                                      |   |   | $  | - |   |
|                                                                                 |   |    |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Off-balance-sheet instruments:                                                       |   |    |    |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Loan commitments and standby letters of credit                                       |   | $  | 25      |   |                                                          | $  | -      |                                         |   | $  | 25                                       |   |   | $  | - |   |

----

----

----

| June 30, 2012                 |   | Total          |   |   | Quoted Prices in Active Markets for Identical Assets(Level 1) |    |   | Significant Other Observable Inputs(Level 2) |   |    | Significant Unobservable Inputs(Level 3) |   |
|-------------------------------|--------|----------------|--------|--------|---------------------------------------------------------------|---------|--------|----------------------------------------------|--------|---------|------------------------------------------|--------|
|                          |   | (In thousands) |   |
| Financial Assets:             |   |                |   |   |                                                               |    |   |                                              |   |    |                                          |   |
| Impaired loans                |   |                |   |   |                                                               |    |   |                                              |   |    |                                          |   |
| Commercial                    |   | $         | 5,285  |   |                                                          | $  | -      |                                         |   | $  | -                                        |   |   | $  | 5,285 |   |
| Commercial real estate        |   |           | 26,469 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 26,469 |   |
| Residential real estate       |   |           | 2,599  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 2,599 |   |
| Construction real estate      |   |           | 11,684 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 11,684 |   |
| Installment and other         |   |           | 876    |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 876 |   |
| Total impaired loans          |   |           | 45,473 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 46,913 |   |
| Mortgage servicing rights     |   |           | 6,610  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 6,610 |   |
| Non-Financial Assets:         |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Other real estate owned       |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Residential real estate       |   |           | 1,944  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 1,944 |   |
| Commercial real estate        |   |           | 909    |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 909 |   |
| Construction real estate      |   |           | 19,621 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 19,621 |   |
| Total other real estate owned |   |           | 22,474 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 22,474 |   |
|                          |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| December 31, 2011             |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
|                          |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Financial Assets:             |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Impaired loans                |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Commercial                    |   | $         | 3,323  |   |                                                          | $  | -      |                                         |   | $  | -                                        |   |   | $  | 3,323 |   |
| Commercial real estate        |   |           | 454    |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 454 |   |
| Residential real estate       |   |           | 4,692  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 4,692 |   |
| Construction real estate      |   |           | 2,341  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 2,341 |   |
| Installment and other         |   |           | -      |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | - |   |
| Total impaired loans          |   |           | 10,810 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 10,810 |   |
| Mortgage servicing rights     |   |           | 6,215  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 6,215 |   |
| Non-Financial Assets:         |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Other real estate owned       |   |           |   |   |                                                          |    |   |                                         |   |    |                                     |   |   |   |   |   |
| Residential real estate       |   |           | 2,908  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 2,908 |   |
| Commercial real estate        |   |           | 1,833  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 1,833 |   |
| Construction real estate      |   |           | 5,869  |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 5,869 |   |
| Total other real estate owned |   |           | 10,610 |   |                                                          |    | -      |                                         |   |    | -                                        |   |   |   | 10,610 |   |

----

|                          |   | Fairvalue |   |  ValuationTechnique(s) |  UnobservableInput(s) | Range(weightedaverage)                                                    |
|-------------------------------|--------|-----------|--------|-----------------------------|----------------------------|---------------------------------------------------------------------------|
| Impaired loans                |   |           |   |                        |                       |                                                                      |
| Commercial                    |   | $    | 5,285  |                        |  Sales comparison     |  Discount based on forced liquidation                                | 50% |
| Commercial real estate        |   |      | 26,469 |                        |  Sales comparison     |  Comparison between sales and income approaches                      | 7-10%(8.5%) |
|                          |   |      |   |                        |  Income approach      |  Cap Rate                                                            | 7-10%(8.5%) |
| Residential real estate       |   |      | 2,599  |                        |  Sales comparison     |  Discount applied to valuation                                       | 5-10%(7.5%) |
| Construction real estate      |   |      | 11,684 |                        |  Sales comparison     |  Discount applied to valuation                                       | 12-20%(16%) |
| Installment and other         |   |      | 876    |                        |  Sales comparison     |  Discount applied to valuation                                       | 10-50%(15%) |
| Total impaired loans          |   | $    | 46,913 |                        |                       |                                                                      |    |
| Mortgage servicing rights     |   | $    | 6,610  |                        |  Income approach      |  Present value of future servicing income based on prepayment speeds |  10.75-14.25% (10.75%) |
| Other real estate owned       |   |      |   |                        |                       |                                                                      |    |
| Residential real estate       |   | $    | 1,944  |                        |  Sales comparison     |  Discount applied to valuation                                       | 5-10%(7.5%) |
| Commercial real estate        |   |      | 909    |                        |  Sales comparison     |  Comparison between sales and income approaches                      | 7-10%(8.5%) |
|                          |   |      |   |                        |  Income approach      |  Cap Rate                                                            | 7-10%(8.5%) |
| Construction real estate      |   |      | 19,621 |                        |  Sales comparison     |  Discount applied to valuation                                       | 12-20%(16%) |
| Total other real estate owned |   | $    | 22,474 |                        |                       |                                                                      |    |

----

----

| June 30, 2012                                                                        |   | Carryingamount |      |   | EstimatedFair value |    |      | QuotedPrices inActiveMarkets for IdenticalAssets(Level 1) |   |    | SignificantOther Observable Inputs(Level 2) |   |   | Significant Unobservable Inputs(Level 3) |      |
|--------------------------------------------------------------------------------------|--------|----------------|-----------|--------|---------------------|---------|-----------|-----------------------------------------------------------|--------|---------|---------------------------------------------|--------|--------|------------------------------------------|-----------|
|                                                                                 |   | (In thousands) |      |
| Financial assets:                                                                    |   |                |      |   |                     |    |      |                                                           |   |    |                                             |   |   |                                          |      |
| Cash and due from banks                                                              |   | $         | 18,482    |   |                | $  | 18,482    |                                                      |   | $  | 18,482                                      |   |   | $                                   | -         |   |   |   | - |   |
| Interest-bearing deposits with banks                                                 |   |           | 86,686    |   |                |    | 86,686    |                                                      |   |    | 86,686                                      |   |   |                                     | -         |   |   |   | - |   |
| Federal funds sold and securities purchased under resell agreements                  |   |           | 3,249     |   |                |    | 3,249     |                                                      |   |    | 3,249                                       |   |   |                                     | -         |   |   |   | - |   |
| Investments:                                                                         |   |           |      |   |                |    |      |                                                      |   |    |                                        |   |   |                                     |      |   |   |   |   |   |
| Available for sale                                                                   |   |           | 143,378   |   |                |    | 143,378   |                                                      |   |    | -                                           |   |   |                                     | 143,378   |   |   |   | - |   |
| Held to maturity                                                                     |   |           | 10,611    |   |                |    | 12,268    |                                                      |   |    | -                                           |   |   |                                     | 12,268    |   |   |   | - |   |
| Equity investments that do not have readily determinable fair values                 |   |           | 8,416     |   |                |    | N/A       |                                                      |   |    | -                                           |   |   |                                     | -         |   |   |   | - |   |
| Loans held for sale                                                                  |   |           | 8,895     |   |                |    | 9,144     |                                                      |   |    | -                                           |   |   |                                     | 9,144     |   |   |   |   |   |
| Loans, net                                                                           |   |           | 1,174,640 |   |                |    | 1,197,591 |                                                      |   |    | -                                           |   |   |                                     | -         |   |   |   | 1,197,607 |   |
| Accrued interest receivable                                                          |   |           | 5,221     |   |                |    | 5,221     |                                                      |   |    | -                                           |   |   |                                     | 421       |   |   |   | 4,800 |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   |           | 485       |   |                |    | 485       |                                                      |   |    | -                                           |   |   |                                     | 485       |   |   |   | - |   |
|                                                                                 |   |           |      |   |                |    |      |                                                      |   |    |                                        |   |   |                                     |      |   |   |   |   |   |
| Off-balance-sheet instruments:                                                       |   |           |      |   |                |    |      |                                                      |   |    |                                        |   |   |                                     |      |   |   |   |   |   |
| Loan commitments and standby letters of credit                                       |   | $         | 19        |   |                | $  | 19        |                                                      |   | $  | -                                           |   |   | $                                   | 19        |   |   |   | - |   |
|                                                                                 |   |           |      |   |                |    |      |                                                      |   |    |                                        |   |   |                                     |      |   |   |   |   |   |
| Financial liabilities:                                                               |   |           |      |   |                |    |      |                                                      |   |    |                                        |   |   |                                     |      |   |   |   |   |   |
| Non-interest-bearing deposits                                                        |   | $         | 154,696   |   |                | $  | 154,696   |                                                      |   | $  | 154,696                                     |   |   | $                                   | -         |   |   |   | - |   |
| Interest-bearing deposits                                                            |   |           | 1,195,811 |   |                |    | 1,201,101 |                                                      |   |    | -                                           |   |   |                                     | 1,201,101 |   |   |   | - |   |
| Short-term borrowings                                                                |   |           | -         |   |                |    | -         |                                                      |   |    | -                                           |   |   |                                     | -         |   |   |   | - |   |
| Long-term borrowings                                                                 |   |           | 22,300    |   |                |    | 24,198    |                                                      |   |    |                                        |   |   |                                     | 24,198    |   |   |   |   |   |
| Junior subordinated debt owed to unconsolidated trusts                               |   |           | 37,116    |   |                |    | 19,832    |                                                      |   |    | -                                           |   |   |                                     | -         |   |   |   | 19,832 |   |
| Accrued interest payable                                                             |   |           | 1,914     |   |                |    | 1,914     |                                                      |   |    | -                                           |   |   |                                     | 1,465     |   |   |   | 449 |   |

----

| December 31, 2011                                                                    |   | Carrying amount |      |   | Estimated Fair value |    |
|--------------------------------------------------------------------------------------|--------|-----------------|-----------|--------|----------------------|---------|
|                                                                                 |   | (In thousands)  |      |
| Financial assets:                                                                    |   |                 |      |   |                      |    |
| Cash and due from banks                                                              |   | $          | 22,690    |   |                 | $  | 22,690 |   |
| Interest-bearing deposits with banks                                                 |   |            | 48,610    |   |                 |    | 48,610 |   |
| Federal funds sold and securities purchased under resell agreements                  |   |            | 11,583    |   |                 |    | 11,583 |   |
| Investments:                                                                         |   |            |      |   |                 |    |   |   |
| Available for sale                                                                   |   |            | 134,711   |   |                 |    | 134,711 |   |
| Held to maturity                                                                     |   |            | 10,779    |   |                 |    | 11,879 |   |
| Equity investments that do not have readily determinable fair values                 |   |            | 9,113     |   |                 |    | N/A |   |
| Loans held for sale                                                                  |   |            | 22,549    |   |                 |    | 23,120 |   |
| Loans, net                                                                           |   |            | 1,187,948 |   |                 |    | 1,219,368 |   |
| Accrued interest receivable                                                          |   |            | 5,889     |   |                 |    | 5,889 |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   |            | 270       |   |                 |    | 270 |   |
|                                                                                 |   |            |      |   |                 |    |   |   |
| Off-balance-sheet instruments:                                                       |   |            |      |   |                 |    |   |   |
| Loan commitments and standby letters of credit                                       |   | $          | 25        |   |                 | $  | 25 |   |
|                                                                                 |   |            |      |   |                 |    |   |   |
| Financial liabilities:                                                               |   |            |      |   |                 |    |   |   |
| Non-interest bearing deposits                                                        |   | $          | 152,669   |   |                 | $  | 152,669 |   |
| Interest bearing deposits                                                            |   |            | 1,174,458 |   |                 |    | 1,180,412 |   |
| Long-term borrowings                                                                 |   |            | 22,300    |   |                 |    | 24,218 |   |
| Junior subordinated debt owed to unconsolidated trusts                               |   |            | 37,116    |   |                 |    | 20,040 |   |
| Accrued interest payable                                                             |   |            | 2,141     |   |                 |    | 2,141 |   |
| Interest rate lock commitments, mandatory forward delivery commitments and pair offs |   |            | 222       |   |                 |    | 222 |   |

----

|                                                                                                         |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|--------------------------------------------------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                                                                                         |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                                                                                         |   | (In thousands)             |   |
| Net income (loss) available to common shareholders                                                           |   | $                     | (2,806 | )      |                     | $  | 227 |   |   | $  | (820 | ) |   | $  | 1,771 |   |
| Add: Provision for loan losses                                                                               |   |                       | 9,755  |   |                     |    | 2,129 |   |   |   | 11,874 |   |   |   | 3,579 |   |
| Add: Provision (benefit) for income taxes                                                                    |   |                       | (1,607 | )      |                     |    | 447 |   |   |   | (45 | )  |   |   | 1,485 |   |
| Add: Dividends and discount accretion on preferred shares                                                    |   |                       | 528    |   |                     |    | 542 |   |   |   | 1,057 |   |   |   | 1,084 |   |
| Net operating income before provision, income taxes and dividends and discount accretion on preferred shares |   | $                     | 5,870  |   |                     | $  | 3,345 |   |   | $  | 12,066 |   |   | $  | 7,919 |   |

----

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----

|                                                                        |   | Three Months Ended June 30, |      |
|-----------------------------------------------------------------------------|--------|-----------------------------|-----------|
|                                                                        |   | 2012                        |      |   | 2011 |   |
|                                                                        |   | AverageBalance              |      |   | Interest |   |   | Yield/Rate |   |   | AverageBalance |   |   | Interest |   |   | Yield/Rate |   |
|                                                                        |   | (Dollars in thousands)      |      |
| Interest-earning Assets:                                                    |   |                        |           |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Loans(1)                                                                    |   | $                      | 1,236,067 |   |   | $  | 15,982 |   |   |   | 5.20 | % |   | $  | 1,182,732 |   |   | $  | 15,927 |   |   |   | 5.40 | % |
| Taxable investment securities                                               |   |                        | 123,740   |   |   |   | 451 |   |   |   | 1.47 |   |   |   | 117,318 |   |   |   | 704 |   |   |   | 2.41 |   |
| Investment securities exempt from federal income taxes (2)                  |   |                        | 16,254    |   |   |   | 267 |   |   |   | 6.61 |   |   |   | 33,427 |   |   |   | 462 |   |   |   | 5.54 |   |
| Federal funds sold and securities purchased under resell agreements         |   |                        | 6,738     |   |   |   | 24 |   |   |   | 1.43 |   |   |   | 7,661 |   |   |   | 7 |   |   |   | 0.37 |   |
| Other interest-bearing deposits                                             |   |                        | 90,627    |   |   |   | 52 |   |   |   | 0.23 |   |   |   | 122,349 |   |   |   | 80 |   |   |   | 0.26 |   |
| Investment in unconsolidated trust subsidiaries                             |   |                        | 1,116     |   |   |   | 17 |   |   |   | 6.13 |   |   |   | 1,116 |   |   |   | 18 |   |   |   | 6.47 |   |
| Equity investments that do not have readily determinable fair values        |   |                        | 3,813     |   |   |   | 34 |   |   |   | 3.59 |   |   |   | 4,534 |   |   |   | 35 |   |   |   | 3.10 |   |
| Total interest-earning assets                                               |   |                        | 1,478,355 |   |   |   | 16,827 |   |   |   | 4.58 |   |   |   | 1,469,137 |   |   |   | 17,233 |   |   |   | 4.70 |   |
| Non-interest-earning assets                                                 |   |                        | 70,526    |   |   |   |   |   |   |   |   |   |   |   | 80,306 |   |   |   |   |   |   |   |   |   |
| Total assets                                                                |   | $                      | 1,548,881 |   |   |   |   |   |   |   |   |   |   | $  | 1,549,443 |   |   |   |   |   |   |   |   |   |
|                                                                        |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing Liabilities:                                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                                   |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                                |   | $                      | 148,835   |   |   | $  | 65 |   |   |   | 0.18 | % |   | $  | 148,079 |   |   | $  | 63 |   |   |   | 0.17 | % |
| Money market deposits                                                       |   |                        | 250,105   |   |   |   | 112 |   |   |   | 0.18 |   |   |   | 248,006 |   |   |   | 120 |   |   |   | 0.19 |   |
| Savings deposits                                                            |   |                        | 323,623   |   |   |   | 134 |   |   |   | 0.17 |   |   |   | 328,301 |   |   |   | 137 |   |   |   | 0.17 |   |
| Time deposits over $100,000                                                 |   |                        | 271,694   |   |   |   | 928 |   |   |   | 1.37 |   |   |   | 295,938 |   |   |   | 1,169 |   |   |   | 1.58 |   |
| Time deposits under $100,000                                                |   |                        | 200,386   |   |   |   | 556 |   |   |   | 1.12 |   |   |   | 204,735 |   |   |   | 711 |   |   |   | 1.39 |   |
| Short-term borrowings                                                       |   |                        | 11        |   |   |   | - |   |   |   | - |   |   |   | 10,000 |   |   |   | 64 |   |   |   | 2.57 |   |
| Long-term borrowings                                                        |   |                        | 22,300    |   |   |   | 189 |   |   |   | 3.41 |   |   |   | 22,300 |   |   |   | 189 |   |   |   | 3.40 |   |
| Long-term capital lease obligations                                         |   |                        | 2,211     |   |   |   | 67 |   |   |   | 12.19 |   |   |   | 2,211 |   |   |   | 67 |   |   |   | 12.15 |   |
| Junior subordinated debt owed to unconsolidated trusts                      |   |                        | 37,116    |   |   |   | 563 |   |   |   | 6.10 |   |   |   | 37,116 |   |   |   | 685 |   |   |   | 7.40 |   |
| Total interest-bearing liabilities                                          |   |                        | 1,256,281 |   |   |   | 2,614 |   |   |   | 0.84 |   |   |   | 1,296,686 |   |   |   | 3,205 |   |   |   | 0.99 |   |
| Demand deposits--non-interest-bearing                                       |   |                        | 57,336    |   |   |   |   |   |   |   |   |   |   |   | 58,876 |   |   |   |   |   |   |   |   |   |
| Other non-interest-bearing liabilities                                      |   |                        | 107,747   |   |   |   |   |   |   |   |   |   |   |   | 68,229 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity, including stock owned by ESOP                         |   |                        | 127,517   |   |   |   |   |   |   |   |   |   |   |   | 125,652 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders equity                                   |   | $                      | 1,548,881 |   |   |   |   |   |   |   |   |   |   | $  | 1,549,443 |   |   |   |   |   |   |   |   |   |
| Net interest income on a fully tax-equivalent basis/interest rate spread(3) |   |                        |      |   |   | $ | 14,213 |   |   |   | 3.74 | % |   |   |   |   |   | $ | 14,028 |   |   |   | 3.71 | % |
| Net interest margin on a fully tax-equivalent basis(4)                      |   |                        |      |   |   |   |   |   |   |   | 3.87 | % |   |   |   |   |   |   |   |   |   |   | 3.83 | % |
| Net interest margin(4)                                                      |   |                        |      |   |   |   |   |   |   |   | 3.84 | % |   |   |   |   |   |   |   |   |   |   | 3.78 | % |
| (1) | Average loans include non-accrual loans of $53.9 million and $59.9 million for the three months ended June 30, 2012 and 2011, respectively.  Interest income includes loan origination fees of $614 thousand and $331 thousand for the three months ended June 30, 2012 and 2011, respectively. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Non-taxable investment income is presented on a fully tax-equivalent basis, adjusting for federal and state exemption of interest income and certain other permanent tax differences. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and is presented on a fully tax-equivalent basis. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Net interest margin represents net interest income as a percentage of average interest-earning assets. |
|-----|--------------------------------------------------------------------------------------------------------|

----

|                                                                 |   | Six Months Ended June 30, |           |        |
|----------------------------------------------------------------------|--------|---------------------------|-----------|--------|
|                                                                 |   | 2012                      |      |   | 2011 |   |  |  |
|                                                                 |   | AverageBalance            |      |   | Interest |   |   | Yield/Rate |   |   | AverageBalance |   |   | Interest |   |   | Yield/Rate |   |  |
|                                                                 |   | (Dollars in thousands)    |      |        |  |
| Interest-earning Assets:                                             |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |  |
| Loans(1)                                                             |   | $                    | 1,235,642 |   |   | $  | 32,158 |   |   |   | 5.23 | % |   | $  | 1,187,110 |   |   | $  | 31,663 |   |   |   | 5.38 | % |
| Taxable investment securities                                        |   |                      | 124,177   |   |   |   | 966 |   |   |   | 1.56 |   |   |   | 121,583 |   |   |   | 1,423 |   |   |   | 2.36 |   |
| Investment securities exempt from federal income taxes (2)           |   |                      | 16,414    |   |   |   | 537 |   |   |   | 6.58 |   |   |   | 33,100 |   |   |   | 920 |   |   |   | 5.60 |   |
| Federal funds sold and securities purchased under resell agreements  |   |                      | 9,552     |   |   |   | 57 |   |   |   | 1.20 |   |   |   | 3,964 |   |   |   | 7 |   |   |   | 0.36 |   |
| Other interest-bearing deposits                                      |   |                      | 79,947    |   |   |   | 92 |   |   |   | 0.23 |   |   |   | 106,243 |   |   |   | 134 |   |   |   | 0.25 |   |
| Investment in unconsolidated trust subsidiaries                      |   |                      | 1,116     |   |   |   | 34 |   |   |   | 6.13 |   |   |   | 1,116 |   |   |   | 40 |   |   |   | 7.23 |   |
| Equity investments that do not have readily determinable fair values |   |                      | 3,959     |   |   |   | 69 |   |   |   | 3.50 |   |   |   | 4,694 |   |   |   | 70 |   |   |   | 3.01 |   |
| Total interest-earning assets                                        |   |                      | 1,470,807 |   |   |   | 33,913 |   |   |   | 4.64 |   |   |   | 1,457,810 |   |   |   | 34,257 |   |   |   | 4.74 |   |
| Non-interest-earning assets                                          |   |                      | 69,132    |   |   |   |   |   |   |   |   |   |   |   | 81,430 |   |   |   |   |   |   |   |   |   |
| Total assets                                                         |   | $                    | 1,539,939 |   |   |   |   |   |   |   |   |   |   | $  | 1,539,240 |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing Liabilities:                                        |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits:                                                            |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW deposits                                                         |   | $                    | 144,084   |   |   | $  | 140 |   |   |   | 0.20 | % |   | $  | 137,563 |   |   | $  | 112 |   |   |   | 0.16 | % |
| Money market deposits                                                |   |                      | 249,102   |   |   |   | 220 |   |   |   | 0.18 |   |   |   | 250,714 |   |   |   | 239 |   |   |   | 0.19 |   |
| Savings deposits                                                     |   |                      | 318,958   |   |   |   | 264 |   |   |   | 0.17 |   |   |   | 319,794 |   |   |   | 264 |   |   |   | 0.17 |   |
| Time deposits over $100,000                                          |   |                      | 272,903   |   |   |   | 1,890 |   |   |   | 1.39 |   |   |   | 298,242 |   |   |   | 2,443 |   |   |   | 1.65 |   |
| Time deposits under $100,000                                         |   |                      | 201,181   |   |   |   | 1,152 |   |   |   | 1.15 |   |   |   | 206,581 |   |   |   | 1,495 |   |   |   | 1.46 |   |
| Short-term borrowings                                                |   |                      | 5         |   |   |   | - |   |   |   | - |   |   |   | 8,631 |   |   |   | 104 |   |   |   | 2.43 |   |
| Long-term borrowings                                                 |   |                      | 22,300    |   |   |   | 378 |   |   |   | 3.41 |   |   |   | 23,681 |   |   |   | 403 |   |   |   | 3.43 |   |
| Long-term capital lease obligations                                  |   |                      | 2,211     |   |   |   | 134 |   |   |   | 12.19 |   |   |   | 2,211 |   |   |   | 134 |   |   |   | 12.22 |   |
| Junior subordinated debt owed to unconsolidated trusts               |   |                      | 37,116    |   |   |   | 1,134 |   |   |   | 6.14 |   |   |   | 37,116 |   |   |   | 1,408 |   |   |   | 7.65 |   |
| Total interest-bearing liabilities                                   |   |                      | 1,247,860 |   |   |   | 5,312 |   |   |   | 0.86 |   |   |   | 1,284,533 |   |   |   | 6,602 |   |   |   | 1.04 |   |
|                                                                 |   |                      |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand deposits--non-interest-bearing                                |   | $                    | 62,360    |   |   |   |   |   |   |   |   |   |   | $  | 56,309 |   |   |   |   |   |   |   |   |   |
| Other non-interest-bearing liabilities                               |   |                      | 102,191   |   |   |   |   |   |   |   |   |   |   |   | 73,186 |   |   |   |   |   |   |   |   |   |
| Stockholders' equity, including stock owned by ESOP                  |   |                      | 127,487   |   |   |   |   |   |   |   |   |   |   |   | 125,211 |   |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders equity                            |   | $                    | 1,539,939 |   |   |   |   |   |   |   |   |   |   | $  | 1,539,239 |   |   |   |   |   |   |   |   |   |
| Net income on a fully tax-equivalent basis/interest rate spread(3)   |   |                      |      |   |   | $ | 28,601 |   |   |   | 3.78 | % |   |   |   |   |   | $ | 27,655 |   |   |   | 3.70 | % |
| Net interest margin on a fully tax-equivalent basis(4)               |   |                      |      |   |   |   |   |   |   |   | 3.91 | % |   |   |   |   |   |   |   |   |   |   | 3.83 | % |
| Net interest margin(4)                                               |   |                      |      |   |   |   |   |   |   |   | 3.88 | % |   |   |   |   |   |   |   |   |   |   | 3.78 | % |
|  (1) | Average loans include non-accrual loans of $57.7 million and $57.5 million for the six months ended June 30, 2012 and 2011, respectively.  Interest income includes loan origination fees of $1.2 million and $738 thousand for the six months ended June 30, 2012 and 2011, respectively. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Non-taxable investment income is presented on a fully tax-equivalent basis, adjusting for federal and state exemption of interest income and certain other permanent tax differences. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Interest rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and is presented on a fully tax-equivalent basis. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Net interest margin represents net interest income as a percentage of average interest-earning assets. |
|-----|--------------------------------------------------------------------------------------------------------|
|                                             |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |    |
|--------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|---------|
|                                             |   | 2012                       |   |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                             |   | (In thousands)             |   |
| Net interest income                              |   | $                     | 14,108 |   |                     | $  | 13,849 |   |   | $  | 28,390 |   |   | $  | 27,299 |   |
| Tax-equivalent adjustment to net interest income |   |                       | 105    |   |                     |    | 179 |   |   |   | 211 |   |   |   | 356 |   |
| Net interest income, fully tax-equivalent basis  |   | $                     | 14,213 |   |                     | $  | 14,028 |   |   | $  | 28,601 |   |   | $  | 27,655 |   |

----

|                                                                 |   | Three Months Ended June 30, |   |   | Six Months Ended June 30, |    |
|----------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|---------|
|                                                                 |   | 2012 Compared to 2011       |   |   | 2012 Compared to 2011     |    |
|                                                                 |   | Change Due to Volume        |   |   | Change Due to Rate        |    |   | Total Change |   |   | Change Due to Volume |   |   | Change Due to Rate |   |   | Total Change |   |
|                                                                 |   | (In thousands               |   |
| Interest-earning Assets:                                             |   |                        |        |   |                      |         |   |   |  |   |   |  |   |   |  |   |
| Loans                                                                |   | $                      | 704    |   |                      | $  | (649 | ) |   | $  | 55 |   |   | $  | 1,275 |   |   | $  | (780 | ) |   | $  | 495 |   |
| Taxable investment securities                                        |   |                        | 37     |   |                      |    | (290 | ) |   |   | (253 | ) |   |   | 29 |   |   |   | (486 | ) |   |   | (457 | ) |
| Investment securities exempt from federal income taxes(1)            |   |                        | (270   | )      |                      |    | 75 |   |   |   | (195 | ) |   |   | (525 | ) |   |   | 142 |   |   |   | (383 | ) |
| Federal funds sold                                                   |   |                        | (1     | )      |                      |    | 18 |   |   |   | 17 |   |   |   | 19 |   |   |   | 31 |   |   |   | 50 |   |
| Other interest bearing deposits                                      |   |                        | (19    | )      |                      |    | (9 | ) |   |   | (28 | ) |   |   | (31 | ) |   |   | (11 | ) |   |   | (42 | ) |
| Investment in unconsolidated trust subsidiaries                      |   |                        | -      |   |                      |    | (1 | ) |   |   | (1 | ) |   |   | - |   |   |   | (6 | ) |   |   | (6 | ) |
| Equity investments that do not have readily determinable fair values |   |                        | (6     | )      |                      |    | 5 |   |   |   | (1 | ) |   |   | (12 | ) |   |   | 11 |   |   |   | (1 | ) |
| Total increase (decrease) in interest income                         |   | $                      | 445    |   |                      | $  | (851 | ) |   | $  | (406 | ) |   | $  | 755 |   |   | $  | (1,099 | ) |   | $  | (344 | ) |
| Interest-bearing Liabilities:                                        |   |                        |   |   |                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Now deposits                                                         |   | $                      | -      |   |                      | $  | 2 |   |   | $  | 2 |   |   | $  | 5 |   |   | $  | 23 |   |   | $  | 28 |   |
| Money market deposits                                                |   |                        | 1      |   |                      |    | (9 | ) |   |   | (8 | ) |   |   | (2 | ) |   |   | (17 | ) |   |   | (19 | ) |
| Savings deposits                                                     |   |                        | (2     | )      |                      |    | (1 | ) |   |   | (3 | ) |   |   | (1 | ) |   |   | 1 |   |   |   | - |   |
| Time deposits over $100,000                                          |   |                        | (91    | )      |                      |    | (150 | ) |   |   | (241 | ) |   |   | (197 | ) |   |   | (356 | ) |   |   | (553 | ) |
| Time deposits under $100,000                                         |   |                        | (15    | )      |                      |    | (140 | ) |   |   | (155 | ) |   |   | (38 | ) |   |   | (305 | ) |   |   | (343 | ) |
| Short-term borrowings                                                |   |                        | (32    | )      |                      |    | (32 | ) |   |   | (64 | ) |   |   | (52 | ) |   |   | (52 | ) |   |   | (104 | ) |
| Long-term borrowings                                                 |   |                        | -      |   |                      |    | - |   |   |   | - |   |   |   | (23 | ) |   |   | (2 | ) |   |   | (25 | ) |
| Long-term capital lease obligations                                  |   |                        | -      |   |                      |    | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Junior subordinated debt owed to unconsolidated trusts               |   |                        | -      |   |                      |    | (122 | ) |   |   | (122 | ) |   |   | - |   |   |   | (274 | ) |   |   | (274 | ) |
| Total (decrease) increase in interest expense                        |   | $                      | (139   | )      |                      | $  | (452 | ) |   | $  | (591 | ) |   | $  | (308 | ) |   | $  | (982 | ) |   | $  | (1,290 | ) |
| Increase (decrease) in net interest income                           |   | $                      | 584    |   |                      | $  | (399 | ) |   | $  | 185 |   |   | $  | 1,063 |   |   | $  | (117 | ) |   | $  | 946 |   |
| (1) | Non-taxable investment income is presented on a fully tax-equivalent basis, adjusting for federal and state exemption of interest income and certain other permanent income tax differences. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                  |   | Three Months EndedJune 30, |   |   |        |    |   | Six Months EndedJune 30, |   |    |                |   |
|---------------------------------------|--------|----------------------------|--------|--------|--------|---------|--------|--------------------------|--------|---------|----------------|--------|
|                                  |   | 2012                       |   |   | 2011   |    |   | Netdifference            |   |    | 2012           |   |   | 2011 |   |   | Netdifference |   |
|                                  |   |                            |   |   |        |    |   |                          |   |    | (In thousands) |   |
| Other income:                         |   |                            |   |   |        |    |   |                          |   |    |                |   |   |  |   |   |  |   |
| Mortgage loan servicing fees          |   | $                     | 645    |   |   | $  | 665    |                     |   | $  | (20            | )      |   | $  | 1,291 |   |   | $  | 1,332 |   |   | $  | (41 | ) |
| Trust and investment services fees    |   |                       | 523    |   |   |    | 501    |                     |   |    | 22             |   |   |   | 1,020 |   |   |   | 961 |   |   |   | 59 |   |
| Loan and other fees                   |   |                       | 923    |   |   |    | 898    |                     |   |    | 25             |   |   |   | 1,755 |   |   |   | 1,711 |   |   |   | 44 |   |
| Service charges on deposits           |   |                       | 407    |   |   |    | 429    |                     |   |    | (22            | )      |   |   | 788 |   |   |   | 812 |   |   |   | (24 | ) |
| Net gain on sale of loans             |   |                       | 1,936  |   |   |    | 459    |                     |   |    | 1,477          |   |   |   | 3,622 |   |   |   | 1,739 |   |   |   | 1,883 |   |
| Net gain on sale of securities        |   |                       | -      |   |   |    | 25     |                     |   |    | (25            | )      |   |   | - |   |   |   | 196 |   |   |   | (196 | ) |
| Title insurance premiums              |   |                       | 285    |   |   |    | 141    |                     |   |    | 144            |   |   |   | 541 |   |   |   | 305 |   |   |   | 236 |   |
| (Loss) on venture capital investments |   |                       | (4     | )      |   |    | -      |                     |   |    | (4             | )      |   |   | (233 | ) |   |   | (225 | ) |   |   | (8 | ) |
| Other operating income                |   |                       | 211    |   |   |    | 105    |                     |   |    | 106            |   |   |   | 358 |   |   |   | 209 |   |   |   | 149 |   |
|                                  |   | $                     | 4,926  |   |   | $  | 3,223  |                     |   | $  | 1,703          |   |   | $  | 9,142 |   |   | $  | 7,040 |   |   | $  | 2,102 |   |

----

|                                                    |   | Three Months EndedJune 30, |   |   |        |    |   | Six Months EndedJune 30, |   |    |        |   |
|---------------------------------------------------------|--------|----------------------------|--------|--------|--------|---------|--------|--------------------------|--------|---------|--------|--------|
|                                                    |   | 2012                       |   |   | 2011   |    |   | Netdifference            |   |    | 2012   |   |   | 2011 |   |   | Netdifference |   |
|                                                    |   | (In thousands)             |   |
| Other expenses:                                         |   |                            |   |   |        |    |   |                          |   |    |        |   |   |  |   |   |  |   |
| Salaries and employee benefits                          |   | $                     | 5,787  |   |   | $  | 5,457  |                     |   | $  | 330    |   |   | $  | 11,994 |   |   | $  | 10,958 |   |   | $  | 1,036 |   |
| Occupancy                                               |   |                       | 1,020  |   |   |    | 951    |                     |   |    | 69     |   |   |   | 1,984 |   |   |   | 1,885 |   |   |   | 99 |   |
| Data processing                                         |   |                       | 819    |   |   |    | 932    |                     |   |    | (113   | )      |   |   | 1,749 |   |   |   | 1,720 |   |   |   | 29 |   |
| Marketing                                               |   |                       | 409    |   |   |    | 313    |                     |   |    | 96     |   |   |   | 807 |   |   |   | 768 |   |   |   | 39 |   |
| Amortization and valuation of mortgage servicing rights |   |                       | 1,195  |   |   |    | 501    |                     |   |    | 694    |   |   |   | 1,028 |   |   |   | 804 |   |   |   | 224 |   |
| Amortization and valuation of other intangible assets   |   |                       | -      |   |   |    | 163    |                     |   |    | (163   | )      |   |   | - |   |   |   | 326 |   |   |   | (326 | ) |
| Supplies                                                |   |                       | 175    |   |   |    | 145    |                     |   |    | 30     |   |   |   | 374 |   |   |   | 506 |   |   |   | (132 | ) |
| Loss on sale of other real estate owned                 |   |                       | 668    |   |   |    | 1,673  |                     |   |    | (1,005 | )      |   |   | 1,628 |   |   |   | 2,331 |   |   |   | (703 | ) |
| Postage                                                 |   |                       | 170    |   |   |    | 180    |                     |   |    | (10    | )      |   |   | 395 |   |   |   | 357 |   |   |   | 38 |   |
| Bankcard and ATM network fees                           |   |                       | 401    |   |   |    | 374    |                     |   |    | 27     |   |   |   | 755 |   |   |   | 717 |   |   |   | 38 |   |
| Legal, professional and accounting fees                 |   |                       | 892    |   |   |    | 925    |                     |   |    | (33    | )      |   |   | 1,755 |   |   |   | 1,650 |   |   |   | 105 |   |
| FDIC insurance premiums                                 |   |                       | 503    |   |   |    | 748    |                     |   |    | (245   | )      |   |   | 1,003 |   |   |   | 1,509 |   |   |   | (506 | ) |
| Collection expenses                                     |   |                       | 358    |   |   |    | 547    |                     |   |    | (189   | )      |   |   | 1,096 |   |   |   | 981 |   |   |   | 115 |   |
| Repossession and fraud losses                           |   |                       | 30     |   |   |    | 165    |                     |   |    | (135   | )      |   |   | 62 |   |   |   | 217 |   |   |   | (155 | ) |
| Other                                                   |   |                       | 737    |   |   |    | 653    |                     |   |    | 84     |   |   |   | 836 |   |   |   | 1,691 |   |   |   | (855 | ) |
|                                                    |   | $                     | 13,164 |   |   | $  | 13,727 |                     |   | $  | (563   | )      |   | $  | 25,466 |   |   | $  | 26,420 |   |   | $  | (954 | ) |

----

----

|                                                            |   | At June 30, 2012 |    |   | At December 31, 2011 |    |    | At June 30, 2011 |   |
|-----------------------------------------------------------------|--------|------------------|---------|--------|----------------------|---------|---------|------------------|--------|
|                                                            |   | AmortizedCost    |    |   | FairValue            |    |    | AmortizedCost    |   |   | FairValue |   |   | AmortizedCost |   |   | FairValue |   |
|                                                            |   | (In thousands)   |    |
| Securities Available for Sale:                                  |   |
| U.S. Government sponsored agencies                              |   | $           | 79,430  |   |                 | $  | 79,617  |             |   | $  | 60,350 |   |   | $  | 60,575 |   |   | $  | 50,784 |   |   | $  | 51,005 |   |
| States and political subdivisions                               |   |             | 5,598   |   |                 |    | 5,645   |             |   |   | 5,960 |   |   |   | 6,030 |   |   |   | 22,433 |   |   |   | 23,162 |   |
| Residential mortgage-backed securities                          |   |             | 58,577  |   |                 |    | 58,116  |             |   |   | 68,632 |   |   |   | 68,106 |   |   |   | 68,619 |   |   |   | 69,102 |   |
| Total securities available for sale                             |   | $           | 143,605 |   |                 | $  | 143,378 |             |   | $  | 134,942 |   |   | $  | 134,711 |   |   | $  | 141,836 |   |   | $  | 143,269 |   |
| Securities Held to Maturity                                     |   |
| States and political subdivisions                               |   | $           | 10,611  |   |                 | $  | 12,268  |             |   | $  | 10,779 |   |   | $  | 11,879 |   |   | $  | 10,945 |   |   | $  | 11,216 |   |
| Total securities held to maturity                               |   | $           | 10,611  |   |                 | $  | 12,268  |             |   | $  | 10,779 |   |   | $  | 11,879 |   |   | $  | 10,945 |   |   | $  | 11,216 |   |
| Other securities:                                               |   |
| Non-marketable equity securities (including FRB and FHLB stock) |   | $           | 7,300   |   |                 | $  | 7,300   |             |   | $  | 7,997 |   |   | $  | 7,997 |   |   | $  | 7,580 |   |   | $  | 7,580 |   |
| Investment in unconsolidated trusts                             |   |             | 1,116   |   |                 |    | 1,116   |             |   |   | 1,116 |   |   |   | 1,116 |   |   |   | 1,116 |   |   |   | 1,116 |   |
| Total other securities                                          |   | $           | 8,416   |   |                 | $  | 8,416   |             |   | $  | 9,113 |   |   | $  | 9,113 |   |   | $  | 8,696 |   |   | $  | 8,696 |   |
|                      |   | At June 30,2012        |      |   | At December 31,2011 |   |   | At June 30,2011 |   |
|---------------------------|--------|------------------------|-----------|--------|---------------------|--------|--------|-----------------|--------|
|                      |   | Amount                 |      |   | Percent             |   |   | Amount          |   |   | Percent |   |   | Amount |   |   | Percent |   |
|                      |   | (Dollars in thousands) |      |
| Commercial                |   | $                 | 169,543   |   |                |   | 14.11  | %               |   | $  | 163,115 |   |   |   | 13.39 | % |   | $  | 157,072 |   |   |   | 13.11 | % |
| Commercial real estate    |   |                   | 456,106   |   |                |   | 37.94  |            |   |   | 448,991 |   |   |   | 36.84 |   |   |   | 433,148 |   |   |   | 36.15 |   |
| Residential real estate   |   |                   | 382,443   |   |                |   | 31.82  |            |   |   | 385,404 |   |   |   | 31.63 |   |   |   | 397,860 |   |   |   | 33.21 |   |
| Construction real estate  |   |                   | 132,326   |   |                |   | 11.01  |            |   |   | 161,803 |   |   |   | 13.28 |   |   |   | 163,159 |   |   |   | 13.62 |   |
| Installment and other     |   |                   | 61,577    |   |                |   | 5.12   |            |   |   | 59,257 |   |   |   | 4.86 |   |   |   | 46,894 |   |   |   | 3.91 |   |
| Total loans               |   |                   | 1,201,995 |   |                |   | 100.00 |            |   |   | 1,218,570 |   |   |   | 100.00 |   |   |   | 1,198,133 |   |   |   | 100.00 |   |
| Unearned income           |   |                   | (2,751    | )      |                |   |   |            |   |   | (2,713 | ) |   |   |   |   |   |   | (2,306 | ) |   |   |   |   |
| Gross loans               |   |                   | 1,199,244 |   |                |   |   |            |   |   | 1,215,857 |   |   |   |   |   |   |   | 1,195,827 |   |   |   |   |   |
| Allowance for loan losses |   |                   | (25,071   | )      |                |   |   |            |   |   | (27,909 | ) |   |   |   |   |   |   | (27,543 | ) |   |   |   |   |
| Net loans                 |   | $                 | 1,174,173 |   |                |   |   |            |   | $  | 1,187,948 |   |   |   |   |   |   | $  | 1,168,284 |   |   |   |   |   |

----

|                                                    |   | AtJune 30,             |   |   | AtDecember 31, |    |   | AtJune 30, |   |
|---------------------------------------------------------|--------|------------------------|--------|--------|----------------|---------|--------|------------|--------|
|                                                    |   | 2012                   |   |   | 2011           |    |   | 2011       |   |
|                                                    |   | (Dollars in thousands) |   |
| Non-accruing loans                                      |   | $                 | 46,151 |   |           | $  | 59,469 |       |   | $  | 57,818 |   |
| Loans 90 days or more past due, still accruing interest |   |                   | -      |   |           |    | -      |       |   |   | - |   |
| Total non-performing loans                              |   |                   | 46,151 |   |           |    | 59,469 |       |   |   | 57,818 |   |
| Other real estate owned                                 |   |                   | 30,199 |   |           |    | 14,139 |       |   |   | 13,976 |   |
| Other repossessed assets                                |   |                   | 594    |   |           |    | 511    |       |   |   | 1,153 |   |
| Total non-performing assets                             |   | $                 | 76,944 |   |           | $  | 74,119 |       |   | $  | 72,947 |   |
| Restructured loans, still accruing interest             |   |                   | 11,628 |   |           |    | 11,220 |       |   |   | 8,918 |   |
| Total non-performing loans to total loans               |   |                   | 3.84   | %      |           |    | 4.88   | %          |   |   | 4.83 | % |
| Allowance for loan losses to non-performing loans       |   |                   | 53.31  | %      |           |    | 46.93  | %          |   |   | 47.64 | % |
| Total non-performing assets to total assets             |   |                   | 4.98   | %      |           |    | 4.87   | %          |   |   | 4.70 | % |

----

|                                         |   | Three Months EndedJune 30, |      |   | Six Months EndedJune 30, |    |
|----------------------------------------------|--------|----------------------------|-----------|--------|--------------------------|---------|
|                                         |   | 2012                       |      |   | 2011                     |    |   | 2012 |   |   | 2011 |   |
|                                         |   | (Dollars in thousands)     |      |
| Balance at beginning of period               |   | $                     | 27,262    |   |                     | $  | 28,384 |   |   | $  | 27,909 |   |   | $  | 28,722 |   |
| Provision for loan losses                    |   |                       | 9,755     |   |                     |    | 2,129 |   |   |   | 11,874 |   |   |   | 3,579 |   |
| Total charge-offs                            |   |                       | (12,391   | )      |                     |    | (3,144 | ) |   |   | (15,321 | ) |   |   | (5,166 | ) |
| Total recoveries                             |   |                       | 445       |   |                     |    | 174 |   |   |   | 609 |   |   |   | 408 |   |
| Net charge-offs                              |   |                       | (11,946   | )      |                     |    | (2,970 | ) |   |   | (14,712 | ) |   |   | (4,758 | ) |
| Balance at end of period                     |   | $                     | 25,071    |   |                     | $  | 27,543 |   |   | $  | 25,071 |   |   | $  | 27,543 |   |
|                                         |   |                       |      |   |                     |    |   |   |   |   |   |   |   |   |   |   |
| Gross loans at end of period                 |   | $                     | 1,199,244 |   |                     | $  | 1,195,827 |   |   | $  | 1,199,244 |   |   | $  | 1,195,827 |   |
| Ratio of allowance to total loans            |   |                       | 2.09      | %      |                     |    | 2.30 | % |   |   | 2.09 | % |   |   | 2.30 | % |
| Ratio of net charge-offs to average loans(1) |   |                       | 3.89      | %      |                     |    | 1.01 | % |   |   | 2.39 | % |   |   | 0.81 | % |
| (1) | Net charge-offs are annualized for the purposes of this calculation. |
|-----|----------------------------------------------------------------------|

----

|                                   |   | AtJune 30, 2012        |   |   | AtDecember 31, 2011 |   |      | AtJune 30, 2011 |   |
|----------------------------------------|--------|------------------------|--------|--------|---------------------|--------|-----------|-----------------|--------|
|                                   |   | Amount                 |   |   | Percent             |   |      | Amount          |   |   | Percent |   |   | Amount |   |   | Percent |   |
|                                   |   | (Dollars in thousands) |   |
| Commercial                             |   | $                 | 5,135  |   |                |   | 14.11     | %               |   | $  | 3,949 |   |   |   | 13.39 | % |   | $  | 5,207 |   |   |   | 13.11 | % |
| Commercial and residential real estate |   |                   | 12,720 |   |                |   | 69.76     |            |   |   | 13,735 |   |   |   | 68.47 |   |   |   | 12,182 |   |   |   | 69.36 |   |
| Construction real estate               |   |                   | 4,181  |   |                |   | 11.01     |            |   |   | 5,984 |   |   |   | 13.28 |   |   |   | 6,251 |   |   |   | 13.62 |   |
| Installment and other                  |   |                   | 3,035  |   |                |   | 5.12      |            |   |   | 4,067 |   |   |   | 4.86 |   |   |   | 3,903 |   |   |   | 3.91 |   |
| Unallocated                            |   |                   | -      |   |                |   |  N/A |            |   |   | 174 |   |   |   |  N/A |   |   |   | - |   |   |   |  N/A |   |
| Total                                  |   | $                 | 25,071 |   |                |   | 100.00    | %               |   | $  | 27,909 |   |   |   | 100.00 | % |   | $  | 27,543 |   |   |   | 100.00 | % |

----

----

|                                        |   | AtJune 30,2012 |   |   | AtDecember 31, 2011 |    |   | AtJune 30,2011 |   |
|---------------------------------------------|--------|----------------|--------|--------|---------------------|---------|--------|----------------|--------|
|                                        |   | (In thousands) |   |
| Performing loans classified as:             |   |
| Substandard                                 |   | $         | 19,308 |   |                | $  | 23,365 |           |   | $  | 16,433 |   |
| Doubtful                                    |   |           | 4,166  |   |                |    | -      |           |   |   | - |   |
| Total performing adversely classified loans |   | $         | 23,474 |   |                | $  | 23,365 |           |   | $  | 16,433 |   |
| Special mention loans                       |   | $         | 9,377  |   |                | $  | 14,139 |           |   | $  | 1,641 |   |

----

----

----

|                                                   |   | Time to Maturity or Repricing |    |
|--------------------------------------------------------|--------|-------------------------------|---------|
| As of June 30, 2012:                                   |   | 0-90 Days                     |    |   | 91-365 Days |   |   | 1-5 Years |   |   | Over 5 Years |   |   | Total |   |
|                                                   |   | (Dollars in thousands)        |    |
| Interest-earning Assets:                               |   |
| Loans                                                  |   | $                        | 566,738 |   |   | $  | 380,844 |   |   | $  | 195,198 |   |   | $  | 56,464 |   |   | $  | 1,199,244 |   |
| Loans held for sale                                    |   |                          | 8,895   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 8,895 |   |
| Investment securities                                  |   |                          | 19,075  |   |   |   | 26,140 |   |   |   | 69,467 |   |   |   | 43,051 |   |   |   | 157,733 |   |
| Securities purchased under agreements to resell        |   |                          | 3,249   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,249 |   |
| Interest-bearing deposits with banks                   |   |                          | 84,702  |   |   |   | 992 |   |   |   | 992 |   |   |   | - |   |   |   | 86,686 |   |
| Investment in unconsolidated trusts                    |   |                          | 496     |   |   |   | - |   |   |   | - |   |   |   | 620 |   |   |   | 1,116 |   |
| Total interest-earning assets                          |   | $                        | 683,155 |   |   | $  | 407,976 |   |   | $  | 265,657 |   |   | $  | 100,135 |   |   | $  | 1,456,923 |   |
|                                                   |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing Liabilities:                          |   |
| NOW deposits                                           |   | $                        | 38,344  |   |   | $  | 70,807 |   |   | $  | - |   |   | $  | - |   |   | $  | 109,151 |   |
| Money market deposits                                  |   |                          | 105,048 |   |   |   | 182,060 |   |   |   | - |   |   |   | - |   |   |   | 287,108 |   |
| Savings deposits                                       |   |                          | 134,104 |   |   |   | 192,071 |   |   |   | - |   |   |   | - |   |   |   | 326,175 |   |
| Time deposits over $100,000                            |   |                          | 49,403  |   |   |   | 118,939 |   |   |   | 92,133 |   |   |   | 12,235 |   |   |   | 272,710 |   |
| Time deposits under $100,000                           |   |                          | 40,925  |   |   |   | 109,642 |   |   |   | 47,262 |   |   |   | 2,838 |   |   |   | 200,667 |   |
| Long-term borrowings                                   |   |                          | -       |   |   |   | - |   |   |   | 20,000 |   |   |   | 2,300 |   |   |   | 22,300 |   |
| Capital lease obligations                              |   |                          | -       |   |   |   | - |   |   |   | 2,211 |   |   |   | - |   |   |   | 2,211 |   |
| Junior subordinated debt owed to unconsolidated trusts |   |                          | 16,496  |   |   |   | - |   |   |   | - |   |   |   | 20,620 |   |   |   | 37,116 |   |
| Total interest-bearing liabilities                     |   | $                        | 384,320 |   |   | $  | 673,519 |   |   | $  | 161,606 |   |   | $  | 37,993 |   |   | $  | 1,257,438 |   |
| Rate sensitive assets (RSA)                            |   | $                        | 683,155 |   |   | $  | 1,091,131 |   |   | $  | 1,356,788 |   |   | $  | 1,456,923 |   |   |   | 1,456,923 |   |
| Rate sensitive liabilities (RSL)                       |   |                          | 384,320 |   |   |   | 1,057,839 |   |   |   | 1,219,445 |   |   |   | 1,257,438 |   |   |   | 1,257,438 |   |
| Cumulative GAP (GAP=RSA-RSL)                           |   |                          | 298,835 |   |   |   | 33,292 |   |   |   | 137,343 |   |   |   | 199,485 |   |   |   | 199,485 |   |
| RSA/Total assets                                       |   |                          | 44.21   | % |   |   | 70.62 | % |   |   | 87.81 | % |   |   | 94.29 | % |   |   | 94.29 | % |
| RSL/Total assets                                       |   |                          | 24.87   | % |   |   | 68.46 | % |   |   | 78.92 | % |   |   | 81.38 | % |   |   | 81.38 | % |
| GAP/Total assets                                       |   |                          | 19.34   | % |   |   | 2.15 | % |   |   | 8.89 | % |   |   | 12.91 | % |   |   | 12.91 | % |
| GAP/RSA                                                |   |                          | 43.74   | % |   |   | 3.05 | % |   |   | 10.12 | % |   |   | 13.69 | % |   |   | 13.69 | % |

----

|                                     |        |   | At June 30, 2012 |    |   | At December 31, 2011 |   |
|-------------------------------------|-------------|--------|------------------|---------|--------|----------------------|--------|
| Changes in Levels of Interest Rates |        |   | Dollar Change    |    |   | Percent Change       |   |   | Dollar Change |   |   | Percent Change |   |
| (Dollars in thousands)              |        |
|                                | +2.00       | %      |             | $  | (4,473 | )                    |   |   | (8.61 | )% |   | $  | (4,272 | ) |   |   | (7.82 | )% |
|                                |  +1.00 |   |             |    | (4,130 | )                    |   |   | (7.95 | ) |   |   | (3,502 | ) |   |   | (6.41 | ) |
|                                | (1.00       | )      |             |    | 94     |                 |   |   | 0.18 |   |   |   | 16 |   |   |   | 0.03 |   |
|                                | (2.00       | )      |             |    | 83     |                 |   |   | 0.16 |   |   |   | 5 |   |   |   | 0.01 |   |
| 1. | Changes in interest rates are immediate. |
|----|------------------------------------------|
| 2. | It is our policy that interest rate exposure due to a 2% interest rate rise or fall be limited to 15% of our annual net interest income, as forecasted by the simulation model.  As demonstrated by the table above, our interest rate risk exposure was within this policy at June 30, 2012. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   |   | 1)Additional training of lending and credit personnel to ensure that loans are appropriately classified and that problem loans are identified and communicated to credit administration on a timely basis;2)Additional training of lending and credit personnel to ensure that impaired loans are measured in accordance with accounting guidance ASC 310-Receivables;3)Ensuring via review by qualified senior management that management's assessment of loans requiring impairment analysis and  valuations of those loans in accordance with ASC 310 is supported by comprehensive documentation and appropriate skepticism;4)Documenting of processes and procedures, along with appropriate additional training, to ensure that the accounting policies, conform to GAAP and are consistently applied prospectively. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 31.1 | Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
|------|-------------------------------------------------------------------------------|
| 31.2 | Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) |
|------|-------------------------------------------------------------------------------|
| 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| 101* | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets at June 30, 2012 and December 31, 2011; (ii) Consolidated Statements of Income for the three and six  months ended June 30, 2012 and June 30, 2011; (iii) Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and June 30, 2011; (iv) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and June 30, 2011; and (v) Notes to Consolidated Financial Statements.  This data shall be filed within 30 days of the initial filing of this Form 10-Q. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                 | TRINITY CAPITAL CORPORATION |
|----------------------|-----------------------------|
|                 |                        |
| Date: August 9, 2012 | By:                         | /s/William C. Enloe |
|                 |                        | William C. Enloe |
|                 |                        | President and Chief Executive Officer |
|                 |                        |   |
| Date: August 9, 2012 | By:                         | /s/Daniel R. Bartholomew |
|                 |                        | Daniel R. Bartholomew |
|                 |                        | Chief Financial Officer |